AHIP September 12, 2019
Executive Summary
A key element of the Affordable Care Act (ACA) is the permanent risk adjustment (RA) program. The risk adjustment program compensates individual and small group issuers that enroll higher than average risk enrollees by transferring funds to them from issuers that enroll lower than average risk enrollees. By compensating plans that disproportionately enroll higher-cost and higher-risk individuals, the ACA risk adjustment program aims to preserve a level playing field among competing plans and mitigate the potential for adverse selection in the individual and small group markets. The goal of RA is to remove incentives for issuers in the individual and small group markets to avoid enrolling people with higher cost health conditions. It is instead designed to encourage...
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