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The Other Problem With Premium Support: Preventing Health Insurers From Cream-Skimming

Alice Rivlin — the former OMB director and co-author of the Domenici/Rivlin “premium support” proposal — admitted today that policy makers would face challenges in preventing private insurers from cherry-picking healthier (and more profitable patients) from traditional Medicare and increasing costs in the fee-for-service system within the envisioned “premium support” structure. While existing proposals rely on risk adjustment mechanisms to prevent the practice, Rivlin conceded at a Brookings event that the tools currently available to regulators are, indeed, far from perfect. Watch it:

Private plans participating in Medicare Advantage continue to, on average, enroll healthier beneficiaries and health insurers are already “trying to withhold data necessary to assure that risk adjustment under the Affordable Care Act.” They’re also fighting to undercut regulations that require all insurers to offer a basic set of essential benefits “by proposing that the essential health benefits package be defined in terms of a dollar value rather than a specific set of covered services.”

Should lawmakers translate premium support into actual legislation, it’s easy to imagine that insurers — who are interested in maximizing profits — will work even harder to water down the government’s ability to prevent the industry from enrolling more profitable beneficiaries.

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