The health insurance companies were painted as evil when the administration was pushing for passage of Obamacare aka The Affordable Care Act, but now the government wants to bail them out via the risk corridor.
Risk corridors are meant to compensate insurance companies that end up with bigger costs than they expected. Under the law, they must sell policies equally to everyone, regardless of their medical history, and some insurers have ended up with an especially unhealthy pool of customers.
If an insurer’s actual claims in 2014 are at least 3% greater than the claims projected when the insurer set 2014 rates, the government (taxpayers) must reimburse the insurer for half of the excess. If actual claims jump 8% beyond projected claims, the government covers 80% of the excess. (This fact sheet from the American Academy of Actuaries has a handy chart.)
The provision allows for redistribution of funds from healthier insurance companies to those losing money but then they go to taxpayer ATM.
The insurers are counting on this massive bailout to avoid a bloodbath of losses from Obamacare and that is not how it is supposed to be used.
In addition, in rules released just ahead of the Thanksgiving holiday, the administration said it was exploring ways to beef up the risk-corridors program in light of the president’s move. The rules don’t set out exactly how the program would change or what it would cost.
Last year, Marco Rubio was able to prevent the “risk corridor” from providing these bailouts.
A 2014 budget measure inspired by the Florida Republican is pushing some insurers to drop out of the ObamaCare exchanges. Instead of allowing HHS to dip into general funds for risk-corridor payments, Rubio’s rider restricted those payouts to funds collected from taxes on insurers.
It forced HHS to cut expected risk corridor payments to pennies on the dollar, and prompted the closure of more than half of the co-ops launched by HHS to provide supposedly low-cost coverage. Now that United Healthcare has signaled that it may cut its losses and get out of the ObamaCare market, The Hill credits Rubio with starting the death spiral many predicted when Democrats first passed ObamaCare.
This year the GOP tried to repeal the risk corridor aka bailout fund but the Democrats under the leadership of the far-left Patty Murray revolted. They want to bailout insurance companies.
Sen. Marco Rubio, R-Fla., is urging GOP congressional leaders to use the must-pass legislation as the vehicle to further restrict the program’s access to taxpayer dollars.
“If the only way Obamacare can continue is for taxpayers to bail out health insurers that lose money because of it, that’s as good an indication as any that the whole law should be repealed and replaced,” the Florida senator wrote in a letter to Republican leadership last week.
Republican Reps. Jim Jordan of Ohio and Tim Huelskamp of Kansas echoed Rubio’s displeasure with the risk corridor program and said at an event on Capitol Hill earlier this week they would oppose any measure that provided additional money to it, as would the approximately 40-member House Freedom Caucus, of which Jordan chairs.
“We certainly don’t want to bail out Obamacare and [be] bailing out big insurance companies,” Huelskamp said.
Prominent conservative leaders also called on Republican leadership to continue restricting the use of taxpayer dollars for the risk corridor program, as the language included in last year’s spending bill did, in a letter sent last month.
The Democrats and Murray say not providing the bailout is a nod to extremists in the GOP.
It is now extreme to not want billions of dollars available to Obama to pay off his health insurance company cronies who supported Obamacare and don’t want to pay the price for doing so.
Prominent conservative leaders including the Heritage Foundation wrote a letter to the GOP leadership urging them to close this loophole.
“The risk corridor program represents a microcosm of [Obamacare], and one of its most insidious provisions, as it attempts to hide the true costs of Obamacare from insurance companies and beneficiaries, and instead spread it out among hardworking taxpayers,” the letter read. “Eliminating the risk corridor program’s ability to do this represents a major blow to the law and a step toward increasing transparency in Obamacare’s exchanges.”