Evaluating risk adjustment transfer payments

Risk adjustment transfer payments continue to have financial implications on insurers in the commercial individual and small group marketplaces. In this analysis, Milliman consultants provide an overview of 2015 transfer payments, comparing them against 2014 results. The authors also explore the following conclusions from their report.

• Total risk adjustment transfer payments at the national level remained at about 10% of premium in the individual market and 6% of premium in the small group market.
• Roughly one in four issuers offering plans in a given state or market in both 2014 and 2015 switched between payer and receiver status.
• Statewide risk scores rose more year-over-year than the movements in market demographics and average plan benefit richness would have suggested.
• Where available, the interim risk adjustment report did not provide a reliable indication of the ultimate value of the 2015 risk score.

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