Did the ACA Affect the Risk Pool in the Individual Insurance Market?


The prospect of “adverse selection” has long been a challenge in the individual health insurance market. When the Affordable Care Act (ACA) and its preexisting-condition protections became law, insurers feared that people enrolling in marketplace plans would generally be less healthy than people who chose not to enroll or those who exited the market altogether.

But a new analysis by Sherry Glied and Adlan Jackson of New York University finds few differences in individual-insurance market participation before and after the ACA’s enactment. The main difference was that more people — particularly young adults — switched from Medicaid to individual insurance, and vice versa, after the ACA took effect.

The ACA’s incentives to purchase individual-market plans appear to have accomplished their intended goal: to expand enrollment without substantially increasing adverse selection. The authors caution, however, that steps by Congress and the Trump administration to remove or weaken key incentives — such as eliminating the penalty for not having health insurance and permitting the sale of plans that don’t meet all the ACA’s requirements — may pose new threats to the stability of the individual-market risk pool going forward.

Entering and exiting the individual health insurance market_1x1 Read the study Did the ACA Affect the Risk Pool in the Individual Insurance Market?