Reclassification Risk in the Small-Group Health Insurance Markets
October 04, 2018
Last month, Wharton Professor Mark Pauly joined Anthony LoSasso, Professor in Health Care Policy and Administration and the University of Illinois at Chicago School of Public Health, at the Cato Institute to discuss reclassification risk in small-group health insurance markets. After you buy insurance, the insurer can promise not to come back and re-underwrite your policy. This promise is called a guaranteed renewal (GR). Your health premium might increase due to some macroeconomic factors, but not in response to changes in your health. Anthony LoSasso’s research finds that even before the regulations codified by the ACA, the market effectively stepped in to protect against reclassification risk through guaranteed renewal, and that this feature eliminates the need for further regulations to guarantee coverage for higher risks, like community rating provisions. Pauly discussed the policy implications of these findings, proposing an individual mandate that contains GR features, high risk pools that would dry up over time, and group insurance that could extend GR to conversion to individual coverage.
The full recording of the event can be found here: https://www.cato.org/events/reclassification-risk-small-group-health-insurance-market