[May 19, 2017] |
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A.M. Best Briefing: Impact of American Health Care Act Positive for Carriers Participating in Individual Markets
A.M. Best thinks some provisions within the American Health Care
Act (AHCA) hold the potential to aid health insurance companies in
alleviating the profitability issues associated with the current
individual markets. A new Best's Briefing, titled,
"Impact of American Health Care Act Is Positive for Carriers
Participating in Individual Markets," reviews the potential impact the
AHCA, which was recently passed in the U.S. House of Representatives,
and if adopted as law, would replace the Patient Protection and
Affordable Care Act (ACA). Some of the AHCA provisions that A.M. Best
believes would be positive for health insurance carriers include:
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Via waiver, insurers would be able to charge higher premiums for
pre-existing conditions. The bill provides $8 billion of funding from
2018 through 2023 to finance high-risk pools, which would provide
assistance with premiums or out-of-pocket costs for impacted
individuals;
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Insurers would be able to charge individuals with a gap in continuous
coverage of more than two months up to 30% more for the first 12
months of premium, which could ease issues that have developed with
individuals purchasing coverage when a medical condition arose;
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States can obtain waivers from annual and unlimited lifetime maximums,
as well as waivers beginning in 2020 to redefine essential health
benefits; and
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Elimination of the ealth insurer fee, which should help certain
carriers improve margins.
A.M. Best believes some AHCA features also could have a negative impact
on health insurers. These provisions include:
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Elimination of the individual mandate, which could cause further
deterioration of the risk pool;
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Repeal of the cost-sharing subsidy in 2020 may result more
lower-income individuals dropping health coverage. Also, tax credits
that would begin in 2020 may be insufficient to cover the cost of
comprehensive plans and may cause individuals, particularly older
insureds, to drop or scale back coverage as well;
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Waiver or elimination of essential health benefits could result in
lower-cost plans and a decline in covered individuals, leading to
lower revenue that could weaken insurers' growth prospects; and
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Pressure on the funds available to the states for Medicaid could
result in longer-term uncertainty and potential revenue compression
for Medicaid carriers.
A.M. Best notes that although the bill intends to remove or ease some of
the ACA's rules and limitations, it also leaves the ability to regulate
the market to U.S. states. If the current bill becomes law, the health
insurance market may return to pre-ACA dynamics, when the way health
insurance policies were designed, priced, and sold varied significantly
by state.
To access a complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=261758.
A.M. Best is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
subsidiaries.
ALL RIGHTS RESERVED.
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