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Health Plans Wary of Losing Individual Mandate, but Cheer Tax Repeal

By Gregory A. Freeman  
   March 15, 2017

Health plan leaders are "giddy" over repealing the health insurance tax, but believe that losing the individual mandate will deprive them of the much-needed healthy, young customers.

The American Health Care Act would bring welcome changes to the insurance industry, but also has health plan executives worried about how repealing the individual mandate will affect their mix of customers.

Payers are concerned that a repeal of the individual mandate provision in the current law will leave them with too few healthy customers.

This is one of the problems that caused many plans to leave the Affordable Care Act market exchanges, notes Public Affairs Director Jennifer Walsh with the law firm of Foley & Lardner in Washington, DC.

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She previously was vice president for federal government affairs at a top 20 Fortune 500 healthcare company and works closely with former U.S. Congressman Dennis Cardoza (D-CA), who chairs the firm's public affairs practice.

Walsh has been watching reactions of health plan leaders since the AHCA was released and she says they are skeptical about how much the bill would reduce healthcare costs, and worried that parts of the bill could be detrimental to the insurance industry.

The main concern of health insurers, she says, is that the AHCA would eliminate the individual mandate in favor of a financial penalty, sometimes steep, for those who go without insurance for a time and then buy a new policy.

"Losing the individual mandate is a problem because they think they won't have enough healthy people incented to buy insurance without that mandate," Walsh says.

"But they've also always felt that the individual mandate was kind of weak the way it was written [into the ACA]. With the ability to put a 30% hike on your premium if you drop coverage and then try to get back in, some plans think that's good. But some plans think it doesn't go far enough to make up for losing the individual mandate."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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