On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (the ARP), a wide-ranging package of health care and economic measures responding to the coronavirus pandemic. The ARP includes a broad expansion of the Affordable Care Act’s (ACA) main health insurance subsidy, the premium tax credit (PTC), the first major expansion of the health care reform law since its passage. This piece highlights the policymaking considerations that states must account for in light of the PTC expansion and uncertainty about future federal action. A key theme that emerges is that states will benefit from approaches that give them the flexibility to adjust policies year by year as the federal landscape develops.
Analysis of HHS Proposed Rules On Reinsurance, Risk Corridors and Risk Adjustment
Wakely Consulting Group – Ross Winkelman, Julie Pepper, Patrick Holland, Syed Mehmud and 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 insurance exchanges. To ensure robust markets, exchanges must have in place processes for mitigating the financial risk to insurers associated with enrolling individuals with diverse health care needs. The intention is for issuers to compete for customers based on cost and quality, rather than attracting the healthiest, lowest-cost enrollees. The U.S. Department of Health and Human Services released its initial proposed rules on Standards Related to Reinsurance, Risk Corridors and Risk Adjustment on July 11, 2011. This issue brief prepared by Wakely Consulting Group summarizes the proposed rules and provides perspective on the implications for states as they integrate risk mitigation into the exchange implementation process. The brief highlights the application of the different risk mitigation programs (risk adjustment, reinsurance and risk corridors) to the various insurance marketplaces (individual and small group, both inside and outside the exchange) and includes next steps for states and insurers. The summary of these rules, as well as the authors’ analysis of their implications, is meant for policy-makers and state officials familiar with these complex issues.
Building on this proposed rules analysis, Wakely Consulting Group 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.