High Risk Pools and Risk Adjustment

As proposals emerge for changes to the Affordable Care Act (ACA) and the individual and small group markets, a concept frequently mentioned is the use of high risk pools to provide coverage for qualifying enrollees with high risk/high cost chronic conditions. While the American Health Care Act (AHCA) appears to be at least in hibernation for now, states may be allowed additional flexibility in administering the ACA, especially where that flexibility might line up with components of the AHCA.

Because of its complexities and administrative burden, some policy makers and researchers have indicated that the risk adjustment mechanism could possibly be eliminated with the introduction of high risk pools.

In an effort to illustrate the interaction of high risk pools and risk adjustment, we modeled the impact of excluding enrollees with high cost chronic conditions (those that could be expected to be part of a high risk pool) from the risk pool for the individual market.