- Today we observe numerous attempts to reform the healthcare sector to enhance its efficiency and attain better results. Numerous critical points acquire the top priority regarding the further evolution of the sphere and insurance is one of them. It has been an ongoing issue for several decades, and now crucial alterations are needed to meet patients requirements. Affordable Care Act (ACA) was considered one of the attempts to improve the situation and introduce fundamental alterations to the sector. However, it failed, and the problem remained topical. Moreover, such a phenomenon as adverse selection can be observed nowadays. Regarding the ACA health insurance, it is defined as the lack of information available to insurers to make an appropriate decision. It occurs because patients demand for insurance increases when the risk of loss is higher; however an insurer is not able to set appropriate prices for this additional risk (Graetz et al. 2016). According to the alterations in ACA, insurers now have to accept all policy applicants regardless of their pre-existing conditions (Graetz et al. 2016). Patients who have been recently diagnosed with severe illness should also be provided with appropriate insurance. The combination of these facts preconditions the appearance of adverse selection phenomenon when insurers do not possess all information needed to make an appropriate decision and set a price for their services.
- Therefore, the problem of adverse selection significantly impacts the healthcare system. It deprives insurers of the opportunity to regulate sums and provide appropriate payments for insurable events. That is why several regulations are introduced to the ACA to solve the problem. Thus, a requirement to maintain minimum coverage is one of the most important amendments to avoid adverse selection. It means that people have to decide that purchasing coverage is a better value for them (Graetz et al. 2016). Furthermore, financial assistance with purchasing coverage is another method to eliminate adverse selection in the sphere. It is introduced to lower prices for the cost of coverage for healthy individuals (Graetz et al. 2016). It will encourage this group to buy the insurance and provide credible information. The third method introduced to ACA is a fixed price for qualified health plans regardless of whether they are offered directly from the insurer or sold by an agent. Finally, the existence of single risk pools mandated by ACA also contributes to the elimination of adverse selection by making a health insurance issuer combine all individual plans into one risk pool (Graetz et al. 2016). It helps to avoid the further sophistication of the issue and improve awareness among insurers.
- Thus, adverse selection along with many other problematic issues in the healthcare sphere preconditioned the need for reforms, At the moment, Trumps administration attempts to attain enhanced results by pursuing legislative reforms to impact ACA (Graetz et al. 2016). However, these reforms will unlikely alter the situation related to the adverse selection in 2018. The fact is that the existing system is too complex and its reforming is a long-term process which consists of several stages. It means that two or three years are needed for the agencies to accept new regulations and for insurers to offer new policies to customers (Graetz et al. 2016). Additionally, current alterations to Obamacare might introduce several problematic issues as the President wants immediate results; however, the transition period needed to implement all strategies might become difficult for agencies that should reconsider their functioning.
Graetz, L., McKillop, C., Kaplan, C., and Waters, T. 2016. “Lessons Learned From the Affordable Care Act: The Premium Subsidy Design May Promote Adverse Selection.” Medical Care Research and Review. Web.