Because reinsurance covers part of the cost of expensive claims, insurers don't have to pay as much. That results in lower premiums and increased enrollment – mostly among people who pay full price. Those who get premium subsidies are already insulated from the full cost of their health insurance coverage. Lower premiums and increases enrollment translate to a more stable insurance market. The American Rescue Plan (ARP) and the Inflation Reduction Act (IRA) have diminished the need for reinsurance programs, at least through the end of 2025. That's because the ARP/IRA have eliminated the ACA's "subsidy cliff" from 2021 through 2025, ensuring that people with income above 400% of the poverty level can qualify for premium subsidies if the second-lowest-cost Silver plan would otherwise be more than 8.5% of their household income. If that provision is extended again by Congress, reinsurance programs would not be as important going forward. But if it isn't, reinsurance will regain its importance in 2026 as a means of keeping coverage more affordable for households that earn more than 400% of the poverty level.  Although reinsurance can be used in any insurance market, the programs we're discussing here are focused on the individual/family health insurance market; some states are considering expanded reinsurance that would also incorporate the small group market.