A lot of attention has been paid to the percent of mostly healthy adults age 18 to 34 enrolled in the federal and state health insurance exchanges to date. Some believe that placing such emphasis on the early mix of the risk pool is a little premature.
The Centers for Medicare & Medicaid Services recently reported that young adults made up 24 percent of the 2.2 million signing up for coverage as of the end of the December.
Under the Affordable Care Act, the administration introduced a portfolio of risk programs to help insulate insurers from the uncertainties and vagaries of the new marketplace. The 3Rs include transitional reinsurance and risk corridor programs that steadily shrink over three years and a permanent risk adjustment mechanism.
The age, health risk pool and demographics of the exchange population to date are consistent with expectations, said Ana Gupte, an analyst with Leerink Research. Enrollment accelerated substantially in December and “the health risk pool is likely to further improve through March 31,” she said in research commentary.
The concern is that if not enough younger and presumably healthier people enroll, premiums might increase in the future. However, “we expect that the 3R insurance regulations will provide downside risk protection for health insurers,” Gupte noted. She estimated that the reinsurance program alone provides 48 percent downside risk protection against exchange premiums in 2014.
However, a recent Milliman report on the 3Rs suggested that the “extent to which issuers will be protected by these programs is not obvious because they interact in a complex manner.”
For example, members with conditions subject to risk adjustment appear to be more profitable for insurers than healthier members without those conditions. That may take away some of the incentive to attract the “young invincibles” to help pay for older members, the report said.
Kevin Counihan, CEO of AccessHealth CT, the Connecticut marketplace, noted that adults under 35 made up 30 percent of his state’s early bird enrollment. He agreed that the issue about how many young people are in the risk pool is critical. “But I think that it is a little overblown at this point” because the risk adjustment, reinsurance and risk corridor programs provide substantial protection for insurers for the transition period.
That’s the purpose for having risk selection safeguards in place. “I think that if that is better understood, maybe some of the attention about this in the first couple of years might go away,” Counihan said.
The exchanges will take four years to implement. “I would caution everyone to take a deep breath and just relax a little bit,” he said, noting that the enrollee numbers and mix will continue to change.