There is a lot of discussion about the ACA being repealed and replaced, but what are the longer-term effects of the ongoing discussions in Washington? Here are the four high-level trends we may expect to observe and how stakeholders would potentially be affected with the changes in the regulatory landscape:
- Healthy people may start leaving the individual market
The repeal eliminates the penalty for not having health insurance. Under the ACA, consumers were charged a penalty for the year they lacked coverage. But now, when consumers file their taxes, they won’t be charged a penalty. Without the penalty, younger and healthier consumers may choose to not have individual coverage.
However, this doesn’t mean they don’t need or want health insurance coverage. Expect employers to play an increasingly important role in filling in the gap. That being said, not all employers offer health insurance. It’s still ambiguous what the self-employed (think contract, freelance, or gig workers) will do. The likely scenario in which many of the self-employed forego insurance under the new regulation, the uninsured rate may increase.
- Carriers may have to adjust their business
The premiums received from healthy people are generally a great hedge for the unhealthier, or higher risk populations for carriers. With the changes occuring in the individual market, carriers can expect a worsening loss ratio: the ratios paid by the premiums to the insurance company to cover settled claims begin to decrease. With the risk pool looking worse, carriers may concentrate on boosting their sales in relatively more stable segments.
Employer-sponsored coverage will be critical for employee retention
If the ACA’s employer mandate is repealed, small businesses may no longer be required to provide affordable, minimum-value coverage to their full-time employees in order to avoid penalties.
That being said, with many people losing their individual health coverage, employees may increasingly expect health coverage from their employers. Employer-sponsored benefits have always played a critical role in attracting and retaining talent, but with the current instability in the market, many employees will appreciate the security of an employer-sponsored coverage plan more than ever.
- States may have increasing regulatory power
States may gain further flexibility to develop healthcare models, affordability, and choices offered. A number of states are currently pushing for their own legislation that could potentially give additional protection to residents beyond the federal level. Keep an eye on states like New York and California, who seek to create programs to increase benefits and requirements set by the ACA.
Sally Poblete is the CEO of Wellthie, a leading provider of next-generation technology solutions to help brokers and insurance carriers thrive in the retail age.