Analysis of HHS Final Rules On Reinsurance, Risk Corridors And Risk Adjustment
Wakely Consulting Group – Ross Winkelman, FSA, MAAA, Julie Peper, FSA, MAAA, Patrick Holland, Syed Mehmud, ASA, MAAA, James Woolman
Under the Affordable Care Act (ACA) much of the expanded coverage will be provided through health insurers offering products on the new health benefit exchanges (exchanges). By compensating issuers for the risks related to the individuals they enroll, provisions related to reinsurance, risk corridors and risk adjustment are designed to lessen the financial risk issuers and exchanges will face under the ACA. These programs will mitigate the impact of adverse selection and encourage issuers to compete based on cost and quality, rather than attracting the healthiest, lowest-cost enrollees. On March 16, 2012, the U.S. Department of Health and Human Services (HHS) issued final rules, titled “Patient Protection and Affordable Care Act; Standards Related to Reinsurance, Risk Corridors and Risk Adjustment.” This research brief prepared by Wakely Consulting Group summarizes the final rules, highlights the changes from the proposed rules of July 11, 2011, and provides Wakely’s perspective on the implications. It is intended for policymakers and state officials familiar with the complexities underlying these issues.
Wakely Consulting Group has also prepared a Work Plan that serves as an outline for state officials on the decisions and actions necessary to implement the risk adjustment and reinsurance provisions of the ACA.
Congress is considering a variety of federal policy changes that will have significant impacts on the Medicaid program, widely expected to reduce enrollment and federal Medicaid funding to states. A variety of state-level estimates have been released, which can be helpful for states as they consider how various policy proposals might impact their Medicaid programs. This expert perspective highlights state agencies that have estimated and quantified the potential impacts of various proposals on enrollment and spending. SHVS will continue to regularly monitor published estimates from states and update this expert perspective.
The budget reconciliation process is continuing to move forward in Congress and includes developing proposals in the House to identify $880 billion in federal savings over the next ten years, the vast majority of which will need to come from Medicaid. To support states in informing and validating their own fiscal and program impact estimates of federal policy changes, Manatt Health has developed, with support and input from State Health and Value Strategies, a new toolkit providing national and state-by-state data on the potential impact of key cuts under consideration in Congress. This expert perspective provides an executive summary of the toolkit and has been updated to include estimates of state-by-state impacts of making work requirements a condition of Medicaid eligibility.
