Another consideration is that some enrollees subject to ACA risk adjustment will have limited enrollment periods even in the current year if they transition to/from Medicaid or large employer-based insurance. Cost and Rating Factors—Actuarial Value and Permissible Rating Different Plan Actuarial Value Levels versus a Standard Benefit Level The ACA establishes Ganetespib STA-9090 four tiers of plan actuarial value, or “metal levels,” plus a catastrophic plan in a separate risk pool. The metal levels are platinum, gold, silver, and bronze, which correspond, respectively, to plans that are expected to pay 90, 80, 70, and 60 percent of the medical expenditures of a standard population. Although all
plans must cover “essential health benefits,6 ” the metal levels are defined by the cost sharing (deductibles, copayments, and coinsurance) the enrollee
pays (not by the medical services the plan covers). The varying metal levels are in contrast to Medicare Advantage and Medicare Part D, where plans provide, at minimum, a standard coverage level. The presence in the market of plans with different actuarial values poses two key considerations for the risk adjustment methodology. The first consideration is how to preserve premium differences that reflect differences in generosity of plan coverage. The risk transfers should counteract the effects of risk selection, but should not adjust away actuarial value differences among plans. A related issue that the ACA’s metal level actuarial value tiers create is differences in induced demand across plans, meaning that enrollees in plans with higher actuarial values are expected to use more services because of lower cost sharing. The policy goal is for the premiums that plans charge enrollees to reflect the different actuarial values of plans (and associated
induced demand), but not to reflect the health status of enrollees. Other things equal, an individual should pay a higher premium for a platinum plan than a bronze plan to reflect the reduced cost sharing the individual pays when enrolled in the platinum plan. But, other things equal, an individual should not pay more to enroll in a platinum plan because it has sicker enrollees on average than the bronze plan. The second consideration raised by the presence of plans with different actuarial values is how to develop risk scores that appropriately reflect a given enrollee’s actuarial risk to a plan in light of the fact that plans Dacomitinib pay a different portion of an enrollee’s total expenditures, depending on the plan metal level. Allowed Rating Factors versus Uniform Premiums The ACA allows individual and small group plans to rate premiums on four factors: age, tobacco use, family size, and geographic rating area. The age variation in premiums is constrained to 3:1 for 21 year olds and older, and the variation based on tobacco use is constrained to 1.5:1.
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