JANUARY

Reasonable expectation of earning a fair return.
Insurers operating in the ACA-compliant individual market rely on premium payments
from enrollees, federal funding for premium tax credits and cost-sharing reduction
subsidies, and risk-mitigation transfers. In total, these revenues must be adequate to
cover claims and administrative costs. They must also provide a reasonable margin for
contribution to reserves and surplus in order to meet solvency requirements and support
ongoing business activities.
Sufficient health insurer participation and plan offerings
Sufficient number of participating health insurers.
Health insurance market competition can provide incentives for health plans to improve
the efficiency of health care delivery, lower administrative costs, and provide products
that are attractive to consumers. The optimal number of insurers likely differs by area
and local market conditions (e.g., the number of eligible enrollees, the degree of provider
concentration). Rural areas can support fewer insurers, for instance, due to low potential
enrollment numbers and the presence of sole community providers.
Sufficient plan offerings.
The number and range of plan offerings must be sufficient to provide appropriate choice
to consumers with respect to plan design features including a variety of out-of-pocket
costs, provider networks, and plan type. This does not preclude requiring standardized plan
designs. Offerings should not be so numerous that they impose an overwhelming burden on
consumers that results in less-than-optimal choices.
Slow health spending growth and high quality of care
Reasonable health care costs and moderate health spending growth.
Long-term sustainability of the individual market requires containing the growth in health
spending.
High quality of care.
There must be a focus not only on containing the growth in health care spending but also on
improving health care quality, measured for instance based on health care outcomes.
AMERICAN ACADEMY OF ACTUARIES 6