Cost control As numerous carriers struggled with high health care costs caused by insuring older and sicker individuals under the ACA, some states experimented with their own reinsurance programs. (Photo: Shutterstock)

An old insurance industry practice has reduced Affordable Care Act (ACA) individual market premiums by an average of nearly 20 percent in seven states, a new analysis has found.

Reinsurance, a practice where insurance carriers reduce risk by purchasing policies from other insurers to limit their losses, has been used by a number of states to to bolster their ACA markets by creating state reinsurance programs to help insurance companies that have struggled with fluctuations in health care costs. Avalere, a health care consulting company, looked at the data to determine how effective they’ve been.

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