The 3 Rs of Health Care Reform

Back in the day, the three Rs were reading, writing and arithmetic. In the world of health care reform, they are reinsurance, risk corridors and risk-adjustment.

Employer group

The “3Rs,” as they are commonly known, are provisions scheduled for 2014 that concern pooling and risk-sharing. These provisions are intended to remove health status from premium calculations, so that neither individuals nor employer groups who have sick employees are rate-disadvantaged.  Here’s what you need to know.



Reinsurance program. Health and Human Services (HHS) and the states will establish a $25 billion transitional (2014 through 2016) reinsurance program for the Individual market. The program is being funded by health insurers and group health plans.

Risk corridors. This provision establishes a risk corridor program for “Qualified Health Plans (QHPs)” in the Individual or Small Group market (2014 through 2016) based on the plan’s ratio of allowable costs to a target amount (modeled on the risk corridors under Medicare Part D for regional PPOs).

Risk-adjustment program. HHS or the states will establish a risk-adjustment process for the Individual and Small Group markets within that state that assesses a charge on issuers whose actuarial risk for a year is less than the average, and pays issuers whose actuarial risk for a year is greater than the average.

We will continue to keep you updated as HHS and the states finalize guidelines and process.


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Stacy Madden