A variety of programs (including commercial insurance, Medicare and Medicaid) have embraced health risk adjustment concepts over the years to address unexpected medical needs and costs that can threaten health plan sustainability and competition.
Under the Affordable Care Act, programs known as reinsurance, risk corridors and risk adjustment—collectively known as the 3Rs—were adopted to protect consumers and stabilize premiums during the initial years of the new commercial health insurance market reforms and coverage expansions. The 3Rs have been designed based largely on lessons learned during implementation of the Medicare prescription drug program in 2006, when they were critical in stabilizing the market during a time of rapid growth and uncertainty.
Together, the 3Rs help create a more stable, predictable system for people enrolling in new commercial health coverage. They also promote more competition in the market by keeping the focus on care coordination and healthcare quality rather than on risk selection.
The nature of assessing and managing insurance risk serves to heighten the critical importance of the 3Rs. The stability and predictability afforded by such tools are needed to prevent the possibility of consumers facing higher premiums and fewer coverage choices in the future.
January 1, 2015