Conservatives turn up the heat on risk corridors, reinsurance

Photo credit: Getty/Andrea Izzotti

Though the risk corridor and reinsurance programs are both set to end this year, they continue to attract controversy as concerns escalate about the Affordable Care Act marketplaces.

Through a campaign called “Bust the Bailouts,” conservative group Freedom Partners is spearheading an effort to ensure both the reinsurance and risk corridors end as planned at the end of 2016. To advance its cause, Freedom Partners says it will release educational videos and meet with members of Congress on the issue.


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In a recent memo, the group accuses insurance companies and the Obama administration of conducting a “quiet lobbying campaign to secure taxpayer-funded bailouts for insurers operating on the public exchanges.”

Indeed, at least one policy brief has advocated for the extension of the reinsurance program. And the Blue Cross Blue Shield Association has asked the federal government to resist what it says are Republican attempts to stop distribution of 2016 reinsurance payments. The organization  pointed out that the funds aren’t a bailout, as the pool of funds is supplied by payers.

GOP lawmakers also have taken issue with the Obama administration’s decision to prioritize reinsurance payments to insurance companies rather than the U.S. Treasury. Yet the Centers for Medicare & Medicaid Services' Acting Administrator Andy Slavitt defended the move, pointing out the agency “received universal public support” when it altered rules to bypass Treasury payments in order to pay back insurers.

Meanwhile, a memo last week from CMS informs insurers that it expects all 2015 risk corridor collections will be used toward remaining 2014 payments, adding “no funds will be available at this time for 2015 benefit year risk corridors payments.”

The memo acknowledges that several insurers have sued to recoup risk corridor payments, saying that while the Justice Department “is vigorously defending” against the suits, the agency is "open to discussing resolution of those claims.” CMS has also said it is exploring additional sources of funding to pay back insurers.

In fact, the risk corridor shortfall is the product of a successful Republican effort--led in part by Florida Sen. Marco Rubio--to make the program budget neutral. 

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