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Debate Over Delaying Individual Mandate Grows Louder

 |  By John Commins  
   November 12, 2013

The American Academy of Actuaries is warning that delaying the individual mandate could affect risk pools and claims in 2014 and beyond. Health plans say they cannot work without this key provision of the Patient Protection and Affordable Care Act.

Insurers and actuaries are warning that extending the enrollment period and delaying the individual mandate under the Affordable Care Act will create "potentially adverse consequences" for the law.

A letter to Congress [PDF] from the American Academy of Actuaries' Health Practice Council noted that the individual mandate and limited open enrollment period were included in the law to bring in a broad cross-section of risks—the young and the old, the healthy and the sick—to ensure the markets are viable and premiums are stable. The group said the approved premium rates for 2014 were based on the assumption that the individual mandate and limited open enrollment period would be in effect.

"If either provision is delayed, there would be an incentive for lower-cost individuals to delay purchasing coverage. If predominantly higher-cost individuals purchase coverage, 2014 premiums may not be adequate to cover that population's costs," the actuaries said.

"Further, as a result, the ACA risk-corridor mechanism would more likely be triggered and the U.S. Department of Health and Human Services would have to make payments to insurers if losses due to insufficient premiums exceeded a certain threshold."

The actuaries said that the adverse selection that would occur as a result of delaying these provisions could affect not only the risk pools and claims in 2014, but also the premiums for 2015, since enrollment information from 2014 would factor in to the development of 2015 rates.

"Irrespective of your views of the ACA, the individual mandate and limited open enrollment periods are integral components of the law, and delaying their implementation could have significant implications for health insurance coverage and costs," the letter said.

However, the actuaries did not entirely rule out delaying a reconfiguration of the implementation dates and deadlines if the technical issues that have hobbled the "marketplace enrollment process persist over a longer period of time." 

Payers' Reaction
America's Health Insurance Plans on Monday flatly stated that the PPACA cannot work without the individual mandate [PDF].

"The ACA includes a broad array of insurance market reforms, such as guaranteed issue, community rating, and prohibiting pre-existing condition exclusions that are intended to work in tandem with new insurance marketplaces, subsidies, and the individual coverage requirements to extend coverage to 30 million Americans," AHIP said.

"However—absent the individual mandate—these reforms will result in higher premiums, more uninsured, and disruption in coverage for millions of Americans due to adverse selection. That is the conclusion of independent, non-partisan experts— including the Congressional Budget Office (CBO), the Urban Institute, and the RAND Corporation." 

Senators Request Delay
The AHIP and AAA letter comes as a growing number of lawmakers in both parties call on the Obama administration to take some sort of action to alleviate the bungled rollout of the health insurance exchanges. Sen. Jeanne Shaheen (D-NH) has asked the White House to "extend the open enrollment period past March 31, 2014 to give Americans more time to obtain coverage."   

"Further, in light of the difficulties individuals may be having with enrolling through healthcare.gov, I ask that you clarify how the individual responsibility penalty will be administered and enforced. If an individual is unable to purchase health insurance due to technical problems with enrollment, they should not be penalized because of lack of coverage," Shaheen said. Ten senators, all Democrats, signed Shaheen's letter.

So far, the Obama Administration has rejected calls to significantly modify critical deadlines for the law.

"Delaying the Affordable Care Act wouldn't delay people's cancer or diabetes or Parkinson," Health and Human Services Secretary Kathleen Sebelius told the Senate Finance Committee last week. "It doesn't delay the higher cost all of us pay when uninsured Americans are left with no choice but to rely on emergency rooms for care. So, for millions of Americans, delay is not an option."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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