Consulting Actuary Greg Fann, FSA, FCA, MAAA was quoted in a recent Atlanta Journal-Constitution article on the implications of ACA reinsurance waivers for subsidized enrollees. Reinsurance reduces gross premiums and directly benefits enrollees who are ineligible to receive premium subsidies, but less is publicly understood about how the much larger subsidized population is indirectly impacted.
Mr. Fann noted the lower enrollment conclusion in a recent Health Affairs paper about Georgia’s marketplace is directionally “obvious” based on the underlying math and that the increased public transparency is beneficial, “It ends up costing the state money and costing some consumers more money. It’s very convoluted and it’s good that this paper’s exposing it.”
Mr. Fann previously explained these underlying dynamics in a 2020 article about state value considerations, “Reduced gross premiums alone can result in higher rates for low-income enrollees, and facilitate disenrollment for price-sensitive consumers and render the risk pool more difficult to predict.”
As a result of this understanding and in alignment with Mr. Fann’s state value focus, other states have elected to avoid reinsurance waivers and pursue avenues which result in greater enrollment changes at lower costs. As an example, enrollment in Texas has more than doubled since 2020 as the State began enforcing ACA rating rules and declined to pursue a reinsurance wavier after a Texas policy organization relying on Mr. Fann’s actuarial analysis concluded ”Reinsurance Pools Offer Surprisingly Little Value to Texas Taxpayers”.
It is important for ACA observers to recognize that these paradoxical dynamics are present not only in Georgia, but also in the other fifteen states where such waivers have been implemented, and that Part II of Georgia’s waiver which enhances enrollment flexibility is wholly unrelated to the ACA reinsurance challenge and its impact.