Health Affairs September 6, 2017
The affordability and stability of premiums in the individual health insurance market figure prominently in the recent and ongoing debates over national health policy. Often overlooked in these debates is the role of risk adjustment and other risk-mitigation measures in promoting both objectives.
Risk adjustment is a vital tool in preventing community rating in the individual market from causing harmful risk selection against plans and insurers’ consequent risk avoidance. Effective risk adjustment lets insurers compete based on efficiency, networks, medical management, and consumer value, instead of by avoiding uncompensated risks. It also ensures that carriers can offer different levels of coverage, even though plans with the most comprehensive coverage are likely to disproportionately attract unhealthy members.
To better understand the...
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