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Study: ACA Can Survive Low Enrollment and Adverse Selection in First Year

New Report Shows that Built-in Provisions in the Affordable Care Act Will Overcome a Slow Start
December 18, 2013

A new report from the Robert Wood Johnson Foundation illustrates why the Affordable Care Act (ACA) can survive lower-than-anticipated enrollment and adverse selection in the new health insurance marketplaces.

 

While recent enrollment projections have improved significantly over those of initial reports, the report’s authors acknowledge several challenges standing in the way of a full, successful implementation of the ACA. However, the authors note that the law has built-in provisions to help mitigate the effect of low enrollment and adverse selection, or high enrollment in insurance marketplaces among people who are older, and thus less healthy and more costly.

 

The authors identify risk corridors—essentially risk-sharing among all of the qualified exchange plans where higher performing plans help to offset the costs of the lower-performing plans—as one such provision. The ACA also provides for a temporary reinsurance program to help pay the medical expenses for high-risk plan enrollees.

 

“Although the Affordable Care Act experienced some hiccups, enrollment in ‎insurance plans has increased greatly in recent weeks,” said Katherine Hempstead, who leads coverage issues at the Robert Wood Johnson Foundation. “Fortunately, there are key provisions in this law that will go a long way to stabilize markets in the event that actual enrollment does not meet forecasts at the end of the first open enrollment period.”

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