The population buying coverage on the Obamacare marketplace could be getting sicker and less healthy, a new analysis finds.
The Society of Actuaries published a lengthy paper on Tuesday looking at the “risk scores” of Obamacare enrollees. A risk score uses things like age, gender, and health diagnoses to estimate how much medicine a given patient use. The higher the risk score, the more health care you’d expect the patient to use — and the more that health care would cost.
Between 2014 and 2015, SOA finds that Obamacare’s average risk scores went up by 5 percent. This means that the overall pool of people on the marketplace were sicker in 2015 than 2014. You can see the data here, in a table from the report.
Changes in risk scores varied significantly by state. In Alabama, risk scores rose by 17.3 percent, while in Nevada they fell 8.4 percent.
The rising risk scores could be a worrisome sign because they could indicate an unhealthy insurance market. Or they could indicate that insurers have simply gotten better at assessing risk — that in 2015, we got a better measure of how much health care the marketplace population might require.
We only have two years of data at this point, so it’s really hard to tell which of those stories might be true.
A separate analysis from the Obama administration that looks at the claims that patients filed in 2014 and 2015 shows no rise in medical spending among the marketplace enrollee — while per-person spending in the rest of the private market rose by about 3 percent per person in the same time period.
If risk scores did continue to rise year after year, that would be worrisome: it would indicate that healthy people are leaving the market, and that premiums would rise to cover the costs of the sicker enrollees. This could ultimately lead to a “death spiral,” where the market collapses as premiums keep rising and rising.
It’s also worth noting that Obamacare has important policy features that will do a lot to guard against a death spiral. Most notably, the vast majority of Obamacare enrollees receive subsidies that limit their premium to a certain percent of their income. So healthy Obamacare enrollees won’t necessarily see their premiums rising quickly, as their subsidy will essentially cover those changes.
Correction: An earlier version of this story described the rising risk scores as indicating a sicker marketplace population. While that is one possible reason risk scores are rising, there are other, completely plausible explanations for the change. This article has been updated to make that clear.