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Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market

One of the Affordable Care Act’s (ACA) signature reforms was creating centralized Health Insurance Marketplaces to offer comprehensive coverage in the form of comprehensive insurance complying with the ACA’s coverage standards. Yet, even after the ACA’s implementation, millions of people were covere...

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Autores principales: Sacks, Daniel W., Drake, Coleman, Abraham, Jean M., Simon, Kosali
Formato: Online Artículo Texto
Lenguaje:English
Publicado: SAGE Publications 2020
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7357013/
https://www.ncbi.nlm.nih.gov/pubmed/32646261
http://dx.doi.org/10.1177/0046958020933765
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author Sacks, Daniel W.
Drake, Coleman
Abraham, Jean M.
Simon, Kosali
author_facet Sacks, Daniel W.
Drake, Coleman
Abraham, Jean M.
Simon, Kosali
author_sort Sacks, Daniel W.
collection PubMed
description One of the Affordable Care Act’s (ACA) signature reforms was creating centralized Health Insurance Marketplaces to offer comprehensive coverage in the form of comprehensive insurance complying with the ACA’s coverage standards. Yet, even after the ACA’s implementation, millions of people were covered through noncompliant plans, primarily in the form of continued enrollment in “grandmothered” and “grandfathered” plans that predated ACA’s full implementation and were allowed under federal and state regulations. Newly proposed and enacted federal legislation may grow the noncompliant segment in future years, and the employment losses of 2020 may grow reliance on individual market coverage further. These factors make it important to understand how the noncompliant segment affects the compliant segment, including the Marketplaces. We show, first, that the noncompliant segment of the individual insurance market substantially outperformed the compliant segment, charging lower premiums but with vastly lower costs, suggesting that insurers have a strong incentive to enter the noncompliant segment. We show, next, that state’s decisions to allow grandmothered plans is associated with stronger financial performance of the noncompliant market, but weaker performance of the compliant segment, as noncompliant plans attract lower-cost enrollees. This finding indicates important linkages between the noncompliant and compliant segments and highlights the role state policy can play in the individual insurance market. Taken together, our results point to substantial cream-skimming, with noncompliant plans enrolling the healthiest enrollees, resulting in higher average claims cost in the compliant segment.
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spelling pubmed-73570132020-07-21 Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market Sacks, Daniel W. Drake, Coleman Abraham, Jean M. Simon, Kosali Inquiry Affordable Care Act 10th Anniversary Issue: The Affordable Care Act in the States - Original Research One of the Affordable Care Act’s (ACA) signature reforms was creating centralized Health Insurance Marketplaces to offer comprehensive coverage in the form of comprehensive insurance complying with the ACA’s coverage standards. Yet, even after the ACA’s implementation, millions of people were covered through noncompliant plans, primarily in the form of continued enrollment in “grandmothered” and “grandfathered” plans that predated ACA’s full implementation and were allowed under federal and state regulations. Newly proposed and enacted federal legislation may grow the noncompliant segment in future years, and the employment losses of 2020 may grow reliance on individual market coverage further. These factors make it important to understand how the noncompliant segment affects the compliant segment, including the Marketplaces. We show, first, that the noncompliant segment of the individual insurance market substantially outperformed the compliant segment, charging lower premiums but with vastly lower costs, suggesting that insurers have a strong incentive to enter the noncompliant segment. We show, next, that state’s decisions to allow grandmothered plans is associated with stronger financial performance of the noncompliant market, but weaker performance of the compliant segment, as noncompliant plans attract lower-cost enrollees. This finding indicates important linkages between the noncompliant and compliant segments and highlights the role state policy can play in the individual insurance market. Taken together, our results point to substantial cream-skimming, with noncompliant plans enrolling the healthiest enrollees, resulting in higher average claims cost in the compliant segment. SAGE Publications 2020-07-09 /pmc/articles/PMC7357013/ /pubmed/32646261 http://dx.doi.org/10.1177/0046958020933765 Text en © The Author(s) 2020 https://creativecommons.org/licenses/by/4.0/ This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page (https://us.sagepub.com/en-us/nam/open-access-at-sage).
spellingShingle Affordable Care Act 10th Anniversary Issue: The Affordable Care Act in the States - Original Research
Sacks, Daniel W.
Drake, Coleman
Abraham, Jean M.
Simon, Kosali
Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title_full Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title_fullStr Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title_full_unstemmed Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title_short Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market
title_sort same game, different names: cream-skimming in the post-aca individual health insurance market
topic Affordable Care Act 10th Anniversary Issue: The Affordable Care Act in the States - Original Research
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7357013/
https://www.ncbi.nlm.nih.gov/pubmed/32646261
http://dx.doi.org/10.1177/0046958020933765
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