This is what it sounds like – insurance for the insurers. Reinsurance provides a backstop so an insurer doesn’t end up with deep losses. To make the exchanges work, the government has an interest in reinsuring the health plans and limiting their financial exposure so that they are willing to participate in the exchanges – and don’t try to game the system and avoid covering people with preexisting conditions or health risks. CMS has projected reinsiurance will keep premiums in the exchanges 10% to 15% lower.
