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August 16, 2016

Affordable Care Act's Reinsurance Programs Keep Market Stable

IPI expert referenced: Merrill Matthews | In The News | Media Hit
  Health Payer Intelligence

By Vera Gruessner

One way that health payers can compete more effectively in the current destabilized environment is by investing resources in reinsurance programs. Reinsurance is a method in which a payer can buy a policy from other insurers in order to manage risk and for tax mitigation. The reinsurer would be responsible for paying some share of the original payer’s claims. The reinsurer would also receive a premium from the original company in order to cover these costs.

Healthcare legislation has created certain reinsurance programs that would ensure more affordable health plans. Kevin Counihan, Health Insurance Marketplace CEO, wrote for The CMS Blog that the Affordable Care Act along with the Medicare Part D prescription drug coverage options have created reinsurance programs that stabilize spending and costs across various populations.


 

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