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ACA debate: Risk corridors, reinsurance, risk adjustment on the table


The "three R's" of the Affordable Care Act help insurers manage the financial risk of covering everyone, while keeping premiums reasonable, Kaiser Health News reported.

With less freedom to set rates, insurers can use the three R's--risk corridors, reinsurance and risk adjustment--to maintain order as sick, previously uninsured consumers enter the market. But Republican debt ceiling negotiations next month may eliminate them.

Critics blast risk corridors, reinsurance and risk adjustment as a bailout of insurance companies, while supporters praise them as ways to keep premiums in check, The Wall Street Journal reported.

According to the conservative case against risk corridors, in particular, the provision is a bailout to avoid a "bloodbath" of ACA losses and "very far from budget neutral," the WSJ noted.

Meanwhile, federal health officials defend risk corridors as "an important protection for consumers and insurers as millions of Americans transition to a new coverage in a brand new marketplace," a spokesman for the Centers for Medicare and Medicaid Services said.

The reinsurance fee kicks in this year. The temporary, three-year tax on insurers is meant to raise $25 billion over the next three years to help offset the costs of covering expensive, unhealthy and riskier consumers who are expected to buy policies on the health insurance exchanges, FierceHealthPayer previously reported.

Under the risk adjustment provision, designed to prohibit risk selection by insurance companies, insurers with healthier members contribute to a fund that redistributes money to insurers that end up with riskier enrollees. The debate has largely ignored this permanent provision, since it doesn't require federal dollars, according to the WSJ.

Sen. Marco Rubio (R-Fla.) and Rep. Tim Griffin (R-Ark.) both sponsored a bill to repeal health reform's risk corridor provision. While the legislation likely won't pass the Democrat-controlled Senate, issues with the three R's will carry on through the midterm elections as Republicans continue their fight to repeal or replace the ACA, KHN noted.

To learn more:
- here's the KHN article
- check out the WSJ blog post

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