Dive Brief:
- Senator Marco Rubio (R-FL) passed a healthcare provision restricting the risk corridor provision of the ACA last year via a spending law that is having a big effect on the health insurance market.
- Risk corridors were set up to help insurance companies who had too many enrollees and not enough cash from premiums to cover medical bills during the first three years of the ACA. Rubio's provision has resulted in insurance companies only receiving about 13% of what they were expecting this year.
- Rubio continues to demand a provision in the final spending bill currently under negotiation to continue the risk corridor restrictions, or to eliminate the program completely. Congress has until Friday when most of federal funding runs out.
Dive Insight:
Blue Cross and Blue Shield has warned the Obama administration and Congress eliminating the federal payments could have a devastating impact on insurance markets, says The New York Times. The ACA provision was established to protect insurers when deciding on premiums when it was uncertain how many would sign up for coverage. The idea was payments into the program would be balanced with payments out, preventing any taxpayer contributions.
Rubio reintroduced his risk corridor bill in January. "If you want to be involved in the exchanges and you lose money, the American taxpayer should not have to bail you out," Rubio recently said on the Senate floor.
The insurance exchanges had huge losses with requests for risk corridor payments of $2.9 billion, compared to $362 million paid into the program by profitable plans. Rubio said he "saved taxpayers $2.5 billion," according to The New York Times because his measure prevented money being used from other sources for the risk corridor payments.
Half (12 of the 23) of the nonprofit insurance cooperatives set up through the ACA have failed, disrupting coverage for more than 700,000 people, with co-op execs pointing to the severe cuts in federal payments as part of the reason.
The administration reassures insurers it will find other funding sources to back its commitment to companies losing money in the exchanges, but a new report by Standard & Poor's says the money doesn't exist.
Clare Krusing, a spokeswoman for America's Health Insurance Plans, told The New York Times the federal payments weren't a bailout for the industry but rather a way to stabilize the market and protect consumers. "When health plans cannot rely on the government to meet its obligations, individuals and families are harmed," she said.