Rhetoric surrounding the Affordable Care Act from President-elect Donald Trump has shifted from a hard-and-fast stance of ‘repeal and replace’ to a concession that some provisions in the bill are worthy of merit. Regardless of whether the legislation gets a full makeover or just a little off the top, affordable health solutions for all will not materialize solely from policy tinkering, but will ultimately be forged from innovations in health insurance provided by the participating insurers.
After three years of operation, insurer participation in the ACA exchanges has dwindled to 3.9 companies per state in 2017 (down from 5.4 companies per state in 2016), and major players have sustained significant losses. At the root of the problems plaguing the ACA exchanges is adverse selection—when those with the highest risk of major health expenditures choose to purchase insurance while those at low risk abstain. When only those without the fortune of good health purchase health plans, the only way for insurers to cover their costs is to increase premiums. This further exacerbates the problem of adverse selection as those in good health become even less willing to pay the increased price for a health plan. This positive feedback loop of price increases and selection is referred to as a ‘death spiral,’ and it spells doom for an insurance market.
In an effort to provide more assistance to those burdened by high health costs, the ACA limits the price of the most expensive plan (for older enrollees) to three times the price of the least expensive plan (for young adults). This ratio is referred to as the Age Band Rating, and the common strategy proposed by Republicans to minimize adverse selection entails widening the Age Band to the industry standard of 5:1. Doing so would lower the minimum premium for those who are young and in good health, and perhaps sway some who could not otherwise justify the purchase of a health plan. However, this could potentially make health plans more expensive for the sick—if lower premiums do not end up attracting more enrollees, those in good health would effectively subsidize their care to a lesser extent. The other side of the aisle proposes increasing the average premium subsidy amount and the tax penalty for not signing up for insurance. This would effectively lower premiums and make it more expensive to be uninsured, but in return increase the amount of tax revenue needed to fund the program. Regrettably, both parties offer proposals that merely shift the burden of cost from one population to another.
Instead, the real solution will need to come from participating health plans offering new propositions of value that integrate with the day-to-day life of potential enrollees and prove useful in the struggle for health. Health plans need to investigate the circumstances preventing the uninsured from purchasing health insurance—despite the availability of payment assistance—and respond with new plan benefits that better integrate with daily experiences and health choices. Simply providing a wider range of actuarial values for the same narrow range of services, already being rejected by the uninsured, will not do the trick in recruiting individuals and families into the market. Inclusion of new and innovative health benefit programs, delivered to members in a way that takes into account everyday struggles and circumstances, can go much further than merely tinkering with the price and quality of the same rejected value proposition.
For example, a seemingly healthy individual named Chris cannot justify purchasing health insurance not only because of the monthly premium, but also due to the high deductible he would have to pay before getting any cost-sharing assistance in the first place. Each time he goes to the doctor, he gets a clean bill of health, but is told to stay active and eat healthier. Chris is finding it more and more difficult to find the time to comply with these orders as he works two part-time jobs. His long hours, residence in a food desert, and inconsistent schedule from week-to-week strap him for time to go grocery shopping for fresh, healthy foods on a regular basis. Because of this, Chris finds himself opting for fast food more than he knowingly should on account of his refrigerator being empty. This time-saving decision is largely a product of Chris’s circumstances and could profoundly deteriorate Chris’s health over time if made a habit.
Because Chris is already healthy, tweaks to current offerings like a lower premium and bare-bones coverage won’t appeal to him as he has little to no use for ‘sick care’ offerings in his current state. Instead, he needs a solution that helps him to comply with his doctor’s orders and maintain his good health into the future. An example of a health plan solution for Chris, and many others facing the same dilemma, would be a discount for an ingredient delivery service or the option to deduct at least part of the purchase of ingredient delivery services from his deductible. As opposed to just being told to eat healthier by his doctor, this health plan benefit would be a practical tool for overcoming the common roadblocks of price, time, and distance deterring his access to an important social determinant of health: availability of healthy food.
This type of solution adds further value to the traditional idea of health insurance as it meets consumers on their own terms with tools to help them overcome barriers to good health. In this way, plans are recognizing that those not purchasing health plans may have different values than the typical health plan consumer, and the tools needed to maintain good health may differ from that of a regular user the traditional healthcare system.
Providing new propositions of value will go much farther in fixing the issue of adverse selection than merely shifting the cost of the same product that the remaining uninsured are reluctant to buy. It is easy to motivate somebody who already interacts with our healthcare system on a regular basis to purchase health insurance, as it is already an integral part of their solution to achieving good health. In order to appeal to the uninsured, health insurers need to seek out the day-to-day health struggles of those who do not consistently utilize traditional healthcare solutions as a means of attaining health, and empower them with practical tools to make progress against those common struggles.
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