A recent report from the nation’s top actuaries takes a sobering look at the challenges policy makers face in creating a viable individual (i.e., non-group) health insurance market—a critical component of any plan to replace the Affordable Care Act. Published by the American Academy of Actuaries, the report, entitled An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes outlines, without a hint of partisanship, the necessary conditions for a sustainable individual market, examines the extent to which those conditions are currently being satisfied, and discusses the implications of proposed changes to either improve the ACA insurance market reforms or (as is most likely the case) replace them with an alternative approach.
The paper offers an unvarnished explanation of the impact of the relevant actuarial principles that informed the ACA and that must be negotiated in the process of its replacement. Any policy maker hoping to expand (or at least to expand access to) health insurance coverage, control rising health care costs, and increase the quality of medical outcomes—the three goals of the ACA—would be well advised to read this paper. The actuarial principles expounded in the paper appear to transcend law and politics and any ACA replacement plan that fails to take them in account may face significant, if not insurmountable, hurdles in achieving its objective.