Wakely was previously retained by the Association for Community Affiliated Plans (ACAP) to develop an educational paper describing the impact of repealing the individual mandate on the individual health insurance market. This supplement to that educational paper provides our observations related to risk selection in the individual health insurance market based on the current, publicly available version of the Graham-Cassidy bill. The full paper should be read in its entirety prior to reviewing this supplement. You can do so here.
Our previous review of historical experiences and literature for related programs and policies shows that an individual market that outlaws discrimination against individuals on the basis of health but does not include a coverage requirement will suffer from increased adverse selection. If individuals have the option to wait to purchase coverage until they get sick, the individual market would become prohibitively expensive. In a world of guaranteed issue—which is retained under the Graham-Cassidy bill—it is necessary to have a mechanism to ensure a sufficient number of people enroll in coverage to prevent adverse selection. Historical experiences have demonstrated that this effect is not theoretical.