RISK CORRIDORS AND REINSURANCE IN HEALTH INSURANCE MARKETPLACES: Insurance for Insurers.

ABSTRACT: Health Insurance Marketplaces established by the Affordable Care Act implement reinsurance and risk corridors. Reinsurance limits insurer costs associated with specific individuals, while risk corridors protect against aggregate losses. Both tighten the insurer's distribution of expected costs. This paper compares the economic costs and consequences of reinsurance and risk corridors. We simulate the insurer's cost distribution under reinsurance and risk corridors using data for a group of individuals likely to enroll in Marketplace plans from the Medical Expenditure Panel Survey. We compare reinsurance and risk corridors in terms of risk reduction and incentives for cost containment. We find that reinsurance and one-sided risk corridors achieve comparable levels of risk reduction for a giv

SUBMITTER: Layton TJ 

PROVIDER: S-EPMC4785828 | biostudies-literature | 2016

REPOSITORIES: biostudies-literature