What is true about the Affordable Care Act's risk adjustment program?

The Affordable Care Act's risk adjustment program is designed to promote fairness and stability in the health insurance marketplace by addressing the varying health risks associated with different insurance plans. The program operates under the principle that plans covering a higher proportion of high-risk enrollees—such as those with chronic conditions or significant health needs—should receive additional financial support to balance the costs they incur.

In this context, funds are indeed transferred from plans with a lower-risk profile (those that tend to enroll healthier individuals) to those with a higher-risk profile. This transfer mechanism helps to ensure that health insurance remains accessible and affordable for individuals who may require more comprehensive health care services. By redistributing funds in this way, the risk adjustment program aims to discourage insurers from selectively diverting healthy individuals away from plans that cover more high-risk enrollees.

This aligns with the principle behind the risk adjustment program, which is fundamental to maintaining a stable and equitable insurance market under the Affordable Care Act. The other options presented do not accurately represent the key mechanisms of the risk adjustment program. For instance, individual risk scores being standardized is essential for fairness, but their standardization does not negate the fund transfer's purpose. Similarly, the issue of subsidies and how they relate to demand is separate from