Hypothetical Mean

Commentary from an Actuarial and Economic Perspective

Abortion, Obamacare, and Arkansas

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The Arkansas legislature is considering legislation to limit abortion coverages in the Arkansas Exchanges [1].  Although it appears to have hit a snag [2], it is worth pointing out that it attempts to separate out the impact of abortion claims from the underlying risk pool (see Section (d)(1)(A)):

Calculate the premium for optional supplemental abortion coverage so that the premium fully covers the estimated cost of an elective abortion for an individual who enrolls for elective abortion coverage.

The above provision seems in direct contravention of federal law 111-148 that instead requires the premium to cover only the actuarial value of the coverage, using the “costs as if such coverage were included for the entire population covered” (see Section 1303).

The costs of the coverage for the entire population (the federal approach) will almost always be less than the cost of coverage for the population who purchases (SB113’s approach).  Therefore, the approach in Arkansas SB 113 is likely to result in significantly higher supplemental abortion premiums, and slightly lower underlying medical premiums.  It also appears to be against federal law for the same reason.  What am I missing?

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Written by Victor

February 6, 2011 at 11:11 pm

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