Feb 19, 2014 08:51 am | Jeff Dunetz
Built into the Obamacare bill is a federal reimbursement program to help insurance companies that are loosing money because they are part of the insurance exchanges. The program is supposed to last three years through 2016. According to the Washington Examiner our imperial President is looking to extend the reimbursement plan via executive fiat.
The reimbursement program was written into the law to protect the insurance companies offset losses created by signing up too few young healthy people to balance out the older people who cost more for the insurance companies to cover.
Industry insiders told the Washington Examiner a plan to extend the Affordable Care Act’s “risk corridors” are under discussion, but that administration officials have not made a final decision.
According to preliminary published estimates, only about a quarter of the people who have signed up so far are the millennial needed to offset the older expensive healthcare consumers. For the exchange risk pools to work that number has to be closer to 40%.
Insurance companies pay into a pool to cover losses for companies that fare poorly but the federal government must step in if there is widespread loss, which some say could happen due to the lack of participation on the health care exchanges from young and healthy individuals.
Risk corridors are aimed at keeping premiums from skyrocketing by requiring the government to “share in the risk associated with the new marketplace,” according to the health care lobbying group America’s Health Insurance Plans (AHIP).
Apparently the President is also look to grant an additional extension for people to keep their "non compliant" plans on the individual marketplace through 2016. Which I am sure has nothing to do with the 2014 midterm and 2016 presidential elections.
But it would also allow people on the individual market to keep non-compliant plans beyond the risk corridor’s 2016 expiration date, leaving health insurance companies serving the exchange vulnerable to financial losses as the more healthy customers continue to stay out of the exchanges.
Health insurance companies are looking for something in exchange for the three-year extension, which will make it much harder for them to sign up healthier and younger customers. Extending the risk corridor program is part of that conversation with the White House, industry sources said.
“If the extension increases adverse selection, premiums will go up and taxpayers will be on the hook for more money through extending the risk corridors,” Mike Tanner, a health care policy scholar at the Cato Institute, a libertarian think tank, said. “The question is, how much? And I don’t think anybody knows because I don’t think anybody knows how many people we are talking about.”
John C. Goodman, the president and CEO of The National Center for Policy Analysis, believes insurance companies participating on the exchanges are headed for significant losses as the sickest and most medically vulnerable get dumped into the exchanges and waivers and delays are granted to the healthy.
Thus we have the rationale for the extension of the federal reimbursement program.
There have been 29 changes to the Obamcare bill made via Presidential executive order using authority that the president does not have. This will be one more.
Each of those orders is another admission that Obamacare is a disastrous program that was thrust upon the American people without being thought through (or even read) by congress. Each of the orders is an announcement that Obamacare does not work.
And this "bailout" of insurance companies, even if it is just for an additional year or two will be costing money our country does not have.