Groups want to keep limits on risk corridor payouts to insurers

Despite news that the nation's largest health insurer is struggling to make a profit on the Affordable Care Act exchanges, some conservative groups want to continue limiting the government's ability to cushion the companies' losses.

The Centers for Medicare & Medicaid Services (CMS) announced in early October that it would only be able to pay $362 million out of the $2.87 billion it owed payers through the ACA's risk corridor program, which is intended to lessen the financial risk of operating on the exchanges. Part of the reason for that shortfall is the provision that requires risk corridor payments be budget-neutral, which means payments from the program cannot exceed receipts.

The risk-corridor shortfall was a nail in the coffin of several consumer operated and oriented plans on the ACA exchanges, and it also has caused financial strain for other smaller insurers. Yet representatives from Heritage Action for America, Americans for Tax Reform, Club for Growth and other conservative organizations sent a letter Tuesday to House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) seeking to keep the risk corridor program budget-neutral for fiscal year 2016.

Though insurance companies are pushing to roll back the budget-neutral restriction, "taxpayers should not be on the hook for any more of Obamacare's failures, and so we urge you to ensure that their voices prevail by continuing to include language preventing risk corridors from becoming a taxpayer bailout in any future appropriations bill," the letter states.

The letter also urges lawmakers to limit or eliminate another of the ACA's "three Rs"--the reinsurance program--saying it "artificially props up Obamacare-participating insurance companies."

The CMS, meanwhile, issued a memo last week reiterating its commitment to find a way to pay insurers the full amount they are owed, even if that means exploring other sources of funding should there be a shortfall for the 2016 program year. A recent report from Standard & Poor's estimates that the program will continue to be underfunded for 2015.

To learn more:
- read the letter

Related Articles:
CMS will seek ways to make up for risk corridor shortfall
Report: Risk corridor woes likely to continue
Some insurers will take hit from risk corridor program shortfall
Risk corridor program shortfall hurts more than just CO-OPs
Losses lead UnitedHealth to rethink role in ACA exchanges

Suggested Articles

While Republicans are blasting Nancy Pelosi's drug plan as socialist, hospitals and insurers are finding a lot to like.

MA plans want to offer supplemental benefits but warn that the additional flexibilities offered by the feds may not be enough to really target beneficiaries.…

Insurance company Oscar hired former Uber talent as its chief executive officer, Jonathan Bush gets a new gig at Firefly Health and more.