The risk corridor data for the 2015 benefit year is in, and the picture doesn’t look good for insurers hoping to recoup past payment shortfalls.
For 2015, the Centers for Medicare & Medicaid Services will owe health plans operating in the individual market $5.2 billion and those in the small-group market $588 million, according to an announcement (PDF). The Affordable Care Act-created risk corridor program collects payments from better-performing plans to subsidize those that experienced losses.
But insurers won’t see any of that money yet, as the government still has to pay down its balance from 2014. The program paid only 12.6% of what of what it owed insurers for 2014 because collections fell considerably short of receivables. Due to a provision tucked into an omnibus spending bill, the program must remain budget neutral—it cannot pay out more than it receives in collections.
Since CMS paid insurers only $362 million for the 2014 benefit year when they were owed $2.87 billion, there was still a $2.5 billion balance on the government’s 2014 obligation.
Thus, “all 2015 benefit year risk corridors collections will be used to pay a portion of balances on 2014 benefit year risk corridors payments,” according the CMS announcement.
In total, the program will pay just $95 million toward the calculated 2014 benefit year payments.
Several insurers, meanwhile, have sued the federal government seeking to recoup payments. The government has argued it does not owe any insurer final payment before the end of the three-year risk corridor program, but it has also signaled it might consider settling insurers’ claims.
When Republicans control the White House and Congress, though, insurers may be less likely to receive a settlement, as conservative lawmakers have criticized the possibility of using federal funds to “bail out” health insurers.