An Open Letter to President-Elect Trump and the Members of
the 115th Congress
RE: Repealing “Obamacare”
Beginning January 20, 2017 with the inauguration of
President Trump, a vote to repeal Obamacare moves from political posturing to
potential reality as the assured veto of prior bills by President Obama is no
longer available. I urge members of the 115th Congress and President-Elect
Trump to consider the real and varied consequences of any changes to the
current programs.
Public reports indicate Congressional leaders are
considering a sweeping repeal of Obamacare with implementation delayed until a
replacement plan is developed. The uncertainty caused by such an approach will result
in unintended negative consequences for the individual healthcare market.
Certain aspects of the current law function only because
private insurers expect robust risk pools. The Health Practice Council of the
American Academy of Actuaries recently sent a letter to House Speaker Ryan and
Minority Leader Pelosi, expressing their concerns regarding a deterioration in
individual health insurance markets if certain provisions of the Affordable
Care Act are repealed without immediate replacement. You may find a copy of the
letter at http://actuary.org/files/publications/HPC_letter_ACA_CSR_120716.pdf
I urge you to thoroughly understand the risks outlined in
the letter before voting on any repeal measures. Unintended consequences can include
significant premium increases by insurance carriers to offset increased
uncertainty and reflect adverse selection in which younger and healthier
individuals drop coverage. The adverse selection will quickly lead to spiraling
premiums and contraction of markets as only high-risk individuals remain in
plans and more insurance companies drop coverage. The number of uninsured would
rise from current levels, leading to less preventative care and higher use of
emergency services with their attendant costs.
I also caution you not to retain certain popular provisions
of Obamacare without understanding the incentives necessary to make them work. For
example, retaining pre-existing conditions protection without exorbitant costs
requires either a very large enrollment base over which to the spread costs of
that benefit or direct subsidies. Keeping the provision without providing
appropriate incentives to provide one or both mechanisms will rapidly lead to a
collapse in the individual healthcare market.
If you do not have sufficient experience with the actuarial
and underwriting principles that underpin the individual insurance marketplace,
I urge you to work with the American Academy of Actuaries to understand how those
principles relate to any proposed legislation before casting your vote.
Sincerely,
James M.
Jackson
Retired Actuary
