PPACA reinsurance program gets ID number

Drafters of PPACA created the three-year PPACA reinsurance program in an effort to protect issuers of individual health insurance against big, PPACA-related increases in medical claims. Insurers can get help with paying the bills of high-cost patients with individual, PPACA-compliant policies bought inside or outside the public exchange system. For 2014, for patients with eligible claims over $45,000, HHS has said the program will pay 80 percent of the eligible claims from $45,000 up to a $250,000 maximum.

PPACA also set up a temporary risk corridors program, which is supposed to protect insurers that sell insurance through the PPACA exchange system against bad underwriting results, and a risk-adjustment program, which is supposed to use cash from insurers with low-risk insureds to pay subsidies to insurers with high-risk insureds. PPACA watchers sometimes refer to the reinsurance program, the risk corridors program and the risk-adjustment program as the “three R’s” programs.

In another NAIC Three R’s move, the NAIC’s Health Risk-Based Capital Working Group is asking for public comments on a risk-adjustment program and risk corridors program “sensitivity test” proposal. The proposal would affect health insurance risk-based capital (RBC) forms. The proposal calls for health insurers to show what they think would happen to their capital levels if they overestimated the risk program payment amounts by 25 percent or underestimated the payment amounts by 25 percent.

See also: What should regulators ask about PPACA plans?