Risk adjustment plus risk corridors: Offsetting impact

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By Aaron S. Wright, Shyam Kolli | 29 January 2015
To mitigate risks to insurers during the transition to new health insurance rules, the ACA includes three premium stabilization programs: the risk adjustment program, the transitional reinsurance program, and risk corridors (the three Rs). The accounting guidance and rules surrounding risk corridors are continually evolving, and there is significant uncertainty in the estimates of the three Rs and their impact on financial statements. Offsetting interactions of the risk adjustment program and risk corridors is key.