When the Affordable Care Act became effective on Jan. 1, 2014, the law included three tools to encourage health plans to participate in the new state-based marketplace exchanges. The tools were designed to discourage insurers from trying to find ways to avoid covering consumers in poor health, to keep insurance premiums stable and to spread risk so that some health insurers did not enroll too many high-cost members. Those three tools were reinsurance, risk adjustment and risk corridors (see separate glossary entries). Reinsurance and risk corridors were in place only for the first three years of the ACA (2014, 2015 and 2016). Risk adjustment is permanent.
