From Health Affairs:
ACA Risk Adjustment And Reinsurance Were Well Targeted In First Two Years
Bethesda, MD—Under the Affordable Care Act (ACA) insurers are barred from varying their coverage offers based on an applicant’s health status. In an effort to make the costs of enrolling both healthy and sick people equivalent for health plans, the ACA established a risk adjustment program in 2014. A new study, released by Health Affairs as a Web First, examined results from the 2014 and 2015 risk adjustment and reinsurance programs for ACA-compliant individual market plans, to evaluate how risk adjustment and reinsurance transfers varied across insurers and to assess how these program payments compared across insurers given their level of per enrollee claims costs. According to the authors, for the 30 percent of insurers with the highest claims in 2014 and 2015, before risk adjustment, claims—excluding administrative expenses—exceeded premium revenues by $90–$397 per enrollee per month. After revenues from risk adjustment and reinsurance were incorporated, this effect was reversed, with revenues exceeding claims by as much as $49 per enrollee per month.