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U.S. Actuaries weigh in on AHCA and Medicaid in letter to legislators

April 2017

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In a letter addressed to leaders in the United States’ House of Representatives and shared with all House and Senate members, the American Academy of Actuaries’ Individual and Small Group Markets Committee and Medicaid Subcommittee in April 2017 provided an actuarial perspective on the American Health Care Act (AHCA).

The analysis examines the effects on enrollment and on the risk pool of the AHCA’s replacement of the individual mandate with a continuous coverage requirement, and the implications of changing the premium subsidies and eliminating cost-sharing subsidies.

The letter discussed approaches to setting state caps, treatment of Medicaid expansion populations, elimination of the individual mandate penalty and imposing continuous coverage requirements among other topics, and suggests to lawmakers that: “To be sustainable, the individual market requires sufficient enrollment numbers and a balanced risk profile.

It also requires a stable regulatory environment that facilitates fair competition, with sufficient health insurer participation and plan offerings. Experience from the first three years of the ACA varies, with the markets in some states faring relatively well.

More typically, however, the results thus far indicate the need for improvement along most of these measures.”

Regarding Medicaid, the analysis reviews implications of the AHCA’s approach to per-enrollee caps, the potential effects of discontinuing the ACA’s enhanced Medicaid funding, and the changes states could experience based on the ACHA’s framework for increasing per capita caps over time.

A new issues brief from the Academy’s Medicaid Funding Work Group examines in greater detail the sustainability implications of alternative funding designs that incorporate state block grants and/or per capita caps.

The American Academy of Actuaries is a 19,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. For more than 50 years, the Academy has assisted public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.

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