Actuaries group issues report on first year of ACA risk adjustment program

For 2014 health plans serving the individual market, the Affordable Care Act’s risk adjustment program worked as intended to shift funds from insurers with low-cost enrollees to insurers with high-cost enrollees, according to a report released today by the American Academy of Actuaries’ Risk Sharing Subcommittee. Still, loss ratios varied among insurers due to differences in premiums and how well they tracked claims experience, administrative costs and other factors, the report adds. “If actual experience suggests that the risk model systematically over- or under-compensates for certain conditions, or the lack of conditions, the risk weights should be reviewed and adjusted as appropriate,” the authors write. They say it also may be appropriate to adjust the program’s risk model for high-cost outliers, socioeconomic status and partial-year enrollees, and to base risk adjustment transfers on the claims-related portion of the state average premium.