An important feature of the recent insurance coverage expansion under the Affordable Care Act (ACA), and arguably one of the law’s most significant achievements, has been the growth of the newly regulated individual insurance market. Nearly 20 million Americans have ACA-compliant individual coverage, and the fourth open enrollment period begins in just a few weeks.
Given the size of this enrollee population and the lack of alternative sources of coverage for most of these individuals, the performance of this marketplace is critical to maintaining the coverage expansion.
Yet, the challenges faced by this young market are many, as highly publicized insurance carrier exits and premium increases have fostered concerns about long-term viability. In response, a variety of proposals have emanated from across the political spectrum, ranging predictably from complete ACA repeal to the swift implementation of a public option in every state.
Between these two endpoints, there are a great many intermediate stops, including suggestions to establish separate risk pools, change age rating, reform risk adjustment, extend reinsurance, require continuous coverage, increase the premium subsidies, raise the individual mandate penalties for those who do not obtain insurance, reduce or eliminate the grace period for late premium payments, encourage more competition, and better enforce existing marketplace rules, to name just a few. (For more discussion on risk adjustment and reinsurance, read this blog post based on a recent issue brief funded by the Robert Wood Johnson Foundation [RWJF].)
While there are many suggestions, there is little concrete information about their potential effects on coverage rates, market parameters, or public spending. Without a doubt, the next administration and Congress will face difficult decisions about how best to address the challenges facing the individual market, and these challenges extend to state governments.
In an attempt to inform decision making on the critical issue of individual market stability, the RWJF is sponsoring the Actuarial Challenge, a friendly competition in which teams of actuaries will develop and test feasible solutions to improve the performance of the individual health insurance market. Our partner in this activity is the actuarial firm Milliman, which is working closely with the American Academy of Actuaries and the Society of Actuaries to publicize the challenge within the actuarial community. Actuaries from all walks of professional life—insurance carriers, provider groups, benefits consultancies, regulatory agencies, and academia are eligible to enter. Participants can enter as a team, or individuals will be placed with others to form a team.
Finalists will be chosen by an expert review panel comprising actuaries who will select the most promising proposals for marketplace solutions. Milliman will then use its Health Care Reform Financing Model to simulate the impact of each proposal on coverage, marketplace performance, and public spending. The advantages and disadvantages of each of these proposed solutions will be discussed by the expert panel in a concluding event. A final report will include participants’ proposals and Milliman’s simulation results.
The goal is to provide decision makers in the next presidential administration with input that will help them understand how various proposals are likely to affect the insurance market.
The challenge was announced in September, and teams will be formed during October. Policy proposals will be submitted during November, and Milliman’s modelling for selected proposals will take place between December 2016 and February 2017. Final results will be shared in early spring 2017.
While the challenge entrants and reviewers will be actuaries, the broader stakeholder community is an important part of helping this event reach its highest potential. The results (in the final report) are designed to be shared with a broad audience of policy makers, industry leaders, consumer advocates, and other market experts.
In an effort to gather suggestions and policy ideas from the broader community, Milliman and the RWJF will host a Twitter chat on Friday, October 21, at 1:00 p.m. ET. You can follow the event on Twitter at #ActuarialChallenge. We encourage everyone with an interest in marketplace stabilization to join the Twitter chat and provide their thoughts. We will be collecting ideas throughout this process and sharing them on the Challenge website.
Creating an Actuarial Challenge is a new experience for both the RWJF and Milliman, and the learning curve has been considerable. Our motivation in developing this event is simple: We believe that the health of the individual insurance market is essential to the preservation of the recent coverage expansion, and both the expertise and objectivity of actuaries are crucial to the formulation and evaluation of insurance policy options. Actionable solutions are at a premium.
For these reasons, we have sought to create a format in which specific proposals can be simulated and compared using common data and methodology, and in which the results can be publicly shared in a relatively timely manner.
While it remains to be seen whether this challenge will function as anticipated, it is our hope that the actuarial community will embrace the opportunity and use their skills and creativity to address this pressing policy issue.
If you have an idea or a proposal worth exploring, take to Twitter and share it with hashtag #ActuarialChallenge.