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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.

Risk Adjustment, Reinsurance Improved Financial Outcomes For Individual Market Insurers With The Highest Claims

By Paul D. Jacobs, Michael L. Cohen, and Patricia Keenan

Jacobs and Keenan are affiliated with the Agency for Healthcare Research and Quality; Cohen is with the Centers for Medicare and Medicaid Services.

This study will also appear in Health Affairs’ April issue.

To obtain their results, the authors analyzed insurer-level data in each state collected by the Centers for Medicare and Medicaid Services (CMS). “The risk adjustment and reinsurance programs were relatively well targeted in the first two years,” the authors concluded. “While there is ongoing discussion regarding the future of the ACA, our findings can shed light on how risk-sharing programs can address risk selection among insurers—a pervasive issue in all health insurance markets.”

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print and online, with frequent Web First studies and health policy briefs published at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, it then switches to pay-per-view for nonsubscribers. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the iPad app.