The troubled launch of Health Care.gov has raised plenty of questions about whether young, healthy people will enroll in coverage — and, if they don't, whether insurance companies will have to raise their premiums or give up on Obama- care's new insurance markets altogether. But the law's authors built in a safety net to help guard against that worst-case scenario. In essence, it's an insurance policy for insurance companies.
The backstop is an approach known as the "three R's." And health care experts say that, taken together, the three prongs will help insurers not only grapple with the transition to the new requirements to cover sick people but also ward off a future in which they raise premiums so much that healthy patients stay away. "All three of those significantly shield the plans from adverse selection," says Timothy Jost, a law professor at Washington & Lee University and a fan of the Affordable Care Act.
"Adverse selection" is the technical term for a bad risk pool — too many sick people, and not enough healthy people, signing up. The Affordable Care Act includes tools, like the individual mandate, to get young people into the system in the first place. If enrollment is truly disastrous, the three R's can't rescue insurance companies, but if it is merely middling and if the mix of sick and healthy patients is merely worse than expected, they can help insurers bounce back. Here's how they work.