Ali Meyer of the Washington Free Beacon warns of one potential measure to shore up the unsustainable Affordable Care Act.
The Obama administration could bail out Obamacare insurers through its risk-corridor program, according to an expert from the Mercatus Center.
The risk-corridor program was designed to constrain risk for health insurers who had uncertainty in pricing premiums for new plans they offered through Obamacare. The program was established and administered in years 2014, 2015, and 2016 and transferred funds from profitable insurers to insurers with losses.
In 2014, the risk-corridor program experienced a shortfall of more than $2.5 billion. Poorly performing insurers requested $2.87 billion in that year, while profitable insurers could only make up about $362 million, leaving a deficit of about $2.5 billion.
According to a memo from the Centers for Medicare and Medicaid Services, the shortfall from 2014 was so large that all of the risk-corridor payments incurred from 2015 would not cover it. …
… There are two sources of funding, which include receipts from profitable insurers and tax revenue, according to [Mercatus Center researcher Brian] Blasé.
“If receipts are way short and the payments must be made, as HHS indicated in the memo then a taxpayer bailout seems inevitable,” he said.
“Some fear that the administration, which desires that as many insurers as possible participate in the exchanges, will disregard the fact that Congress made risk corridors budget neutral and will settle with insurers, awarding payments out of a permanent appropriation for judgments,” Blasé wrote.
Blasé estimates that a bailout would total about $7.5 billion, although the numbers for 2015 won’t be officially released until they put out the information in a few months.
