The Centers for Medicare and Medicaid Services, which is part of the Department of Health and Human Services, last week released a report about a wonky aspect of the Affordable Care Act related to insurance payments. Tucked away in the report, however, was evidence that the health insurance marketplaces set up by Obamacare were relatively stable in 2016. Contrary to the “death-spiral” narrative, the CMS report found that the mix of healthy and sick people buying insurance on the Obamacare marketplaces in 2016 was surprisingly similar to those who enrolled in 2015.
Explaining what CMS found requires a dip in the sea of the actuarial terminology, so take a deep breath, we’ll be back up for air shortly. The report looked, in part, at so-called risk-adjustment payments, which are part of the ACA’s system for encouraging insurers to enroll high-cost patients. This system is meant to prevent insurers from cherry-picking the healthiest people on the market by collecting money from plans with healthier enrollees to distribute to plans that have people with higher health care costs. (Another type of payment discussed in the report, known as reinsurance, serves a similar purpose through a different mechanism: The government effectively covers part of the cost of patients with very expensive health needs.)