Reinsurance Program Fair for Employers


mmon705l

This past summer I worked for Cigna, which a major multinational health insurance provider. Obviously, the Affordable Care Act is major topic of discussion there and I had become pretty well versed with the Act over the course of the summer I spent there. So I was not surprised when I got a 10/10 on the quiz, which only covered the main points of Act.  Though, I did not know about many of the more obscure points of it.  One aspect that I did not know anything about was the reinsurance program that was established with the Act.

Reinsurance is typically insurance bought by insurance companies from other insurance companies as a way to hedge risk on some of the policies that they hold. The reinsurance program that is established by the Affordable Care Act is for employers already providing health benefits to its retirees over the age of 55 who are not eligible for Medicare.  It is a temporary program that will provide employers reimbursement of 80% of claims between $15,000 and $90,000. The purpose of this program is to lower the costs of the employees registering in their employer’s health care plan.  A total of $5 billion is to be put into the program and will be effective until January 1, 2014.

Regardless of my own political opinions on the Affordable Care Act as a whole, I think that this is a beneficial aspect of the bill.  A fair amount of burden is put on employers to provide care to its employees and if they are already providing benefits to retirees, it seems reasonable to give them some assistance during the transition phase of the enactment of the bill.  As far as a “Mandingo” or “Broomhilda” for the Affordable Care Act, I do not think that there is really either for the Act. Mainly because I think that the objective of the bill is straightforward and it would be almost impossible to try to put a “Broomhilda” into the Act because it is so widely scrutinized.

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3 comments on “Reinsurance Program Fair for Employers

  1. I would argue that it would be very possible to put a “Brunhilde” in the act because of the sheer size and depth of the act. To read the 900 page act would take months, meaning it might be possible to slip in a small feature that down the road may have some major affects on the economy.

  2. Why does there need to be a law to create reinsurance?

    Is the government running this plan?

    Given the problem of “legacy” costs at firms like the big 3 automakers who signed contracts for lifetime health coverage, maybe this is meant ot help defray those costs making older, large firms more competitive with those crafty Japanese and European ones who get away with NOT offering lifetime coverage since their devious societies have single payer and/or universal coverage.

    🙂

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