The individual health insurance market undergoes dramatic changes in 2014 under the Affordable Care Act, especially for health plans offering coverage through the new Health Insurance Exchanges. The ACA’s regulatory and financial framework present challenges for health insurers in selling coverage, managing risk, ensuring compliance, and adapting to future changes.
To reduce risk and plan for the post-ACA marketplace, health plans may draw on some interesting lessons from the Medicare Part D prescription drug plan market, especially Medicare Advantage Drug Plans (MAPDs). Medicare’s market for drug plans offers some fascinating regulatory and operational parallels for the new individual, non-group market under ACA, particularly for qualified health plans (QHPs) contracting with the federal or state-run Health Insurance Exchanges.
- Compares the Medicare drug plan market and the individual market under the ACA.
- Describes plan design, benefit packages, premium pricing, rating restrictions, service areas, provider networks, and new regulatory oversights for individual plans, with lessons learned from the Medicare Part D framework.
- Offers practical advice for health insurers on how to manage the key operational, financial, and regulatory risks present by ACA, drawing on experience gained from Medicare Part D market created in 2006 under the Medicare Modernization Act (MMA).
The concise briefing paper – written by Hans K. Leida, PhD, FSA, MAAA, consulting actuary and principal in Milliman’s Minneapolis office – gives a basis for some optimism for the ability of health plans to adapt to the broad, unprecedented changes mandated under the Affordable Care Act.
Read the briefing paper here.