Dive Brief:
- Health plans that lose money on exchange products this year could receive as much as $5.5 billion next year to cover their losses.
- Under the ACA, insurers who report a profit of 3% or more on their ACA business will put some of the extra money into a government controlled fund. Health plans whose claims cost at least 3% more than their premium revenue would have access to the money.
- The Obama administration expects to collect enough money from profitable insurers to cover the payments to other companies in what is known as the "risk corridors program."
Dive Insight:
The Obama administration sees the payments as a means of keeping the insurance market stable during a time of great uncertainty. According to a spokesperson from the Office of Management and Budget, the risk corridors program is "an important safety valve for consumers and insurers as millions of Americans transition to new coverage in a brand-new marketplace." The question is whether at the close of next year if premiums have fallen, insurers are confident they know the marketplace and millions more are insured. When the insurers can offer exchange policies without training wheels, then we'll know we've had a real, lasting change in the system.