AHIP’s Letter To The Wall Street Journal: Risk-Adjustment Keeps Insurance Prices Steady

posted by Matt Eyles, AHIP President & CEO

on July 16, 2018

AHIP CEO Matt Eyles weighed in with Wall Street Journal on its recent editorial about the freeze of risk adjustment transfers. Read full letter to the editor below.

Your July 10 editorial “The Health Insurers Squawk” questioned why health-insurance premiums would go up because the government froze “risk-adjustment payments” following a federal-court ruling. The Journal’s business-oriented readers understand better than most the importance of certainty and predictability in the legal and regulatory environment. They also understand how essential it is to have predictable government policies, like regulations and taxes, to run their business, make investments, and serve their customers.

Unfortunately, while health-insurance providers are committed to serving customers and patients, they have not experienced such certainty and predictability since the inception of today’s individual and small-group markets. And this has contributed to higher costs, higher premiums and fewer coverage choices for Americans.

The risk-adjustment program involves zero federal or taxpayer dollars. The government sets the operating rules and administers the program, transferring premium dollars from plans with healthier members to plans with members who need more care. The government’s role is both limited and beneficial in helping ensure sicker patients, like those with pre-existing conditions, get more affordable coverage.

Freezing these risk-adjustment transfers in the individual and small-group markets changes the rules once again and puts $10.4 billion in limbo—dollars that pay for patient care. Even if the payments are ultimately made, this added uncertainty has implications for executives evaluating risks and opportunities, making decisions about plan design, and determining how to responsibly serve their customers, communities and employees.

As insurance providers work with states to finalize plans and rates for 2019, we appreciate that the current administration is defending the risk-adjustment program and exploring all legal and regulatory remedies. We are eager to work with them and all other interested parties toward a swift resolution so we can ensure more affordable choices for 2019.