Skimpy Health Plans Put Consumers, Insurance Markets at Risk
The Affordable Care Act's (ACA) critics are now proposing "alternative" health coverage options that offer skimpier benefits and operate separately from regular health insurance markets that serve individuals. While recent state-level and federal proposals differ in the details, they'd have a similar result: People who buy skimpy plans would face staggering costs when they get sick, and consumers who want comprehensive coverage could face drastic premium increases.
Most recently,
Along similar lines, the
Each of these ideas raise the risk that insurance pools will split into separate healthy and less healthy groups, which is known as adverse selection and which prompts insurers to raise premiums, sometimes substantially, for the less-healthy group with more comprehensive coverage. That's the same force at work under last summer's proposal from Senator
Policymakers understandably want to find ways to lower premiums for individuals who buy their own coverage but have incomes too high to qualify for subsidies to help them buy coverage through the ACA marketplaces. But ideas that split the risk pool would only raise premiums for comprehensive health insurance even further, a burden that falls most harshly on middle-income people with pre-existing conditions. Policymakers should set such proposals aside in favor of other ideas, such as reinsurance programs that serve to hold down premiums, enhanced subsidies, improved outreach to potential insurance plan enrollees, and other efforts to broaden the risk pool that build on current standards and protections.
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