That sobering caution from the actuary group comes as some congressional leaders have called for quick action in early 2017 to repeal key sections of the Affordable Care Act, while at the same time delaying the effective date of that repeal for up to two years or more so that a replacement plan can be crafted in the interim.
"Delaying the effective date of repeal while a replacement plan is worked out likely won't be enough to assure the stability and sustainability of the individual market," said a letter from Shari Westerfield, vice president of the AAA's Health Practice Council, to House Speaker Paul Ryan, R-Wisc., and Democratic leader Rep. Nancy Pelosi of California.
The academy said that the repeal of major provisions, such as the Obamacare requirement that most Americans have some form of health insurance or pay a fine, and the subsidies that help millions of people buy individual health plans, "would raise immediate concerns that individual market enrollment would decline."
"People who are most at risk of high health care costs would be most likely to enroll, while many healthier individuals decide not to purchase coverage," the letter said.
That, in turn, would "cause risk pools to deteriorate and premiums to become less affordable." A risk pool is insurers' group of customers: a sicker risk pool costs insurers more money to operate.
"Even if the effective date of a repeal is delayed, the threat of deterioration of the the risk pool could lead additional insurers to reconsider their participation in the individual market," said the letter.
"Premiums for the remaining pool would increase as a result, further exacerbating adverse selection concerns. A premium spiral could result, with fewer and fewer insurers and higher and higher premiums."
The letter added that eliminating reimbursements to insurers for subsidies that lower customers' out-of-pocket health expenses "could result in insurer losses and solvency challengers, leading insurers to consider withdrawing from the market."