Here we go: CMS letter to state regulators on ObamaCare “fix” hints at “risk corridor” bailout for insurers

posted at 4:41 pm on November 15, 2013 by Allahpundit

Excellent catch by Chris Jacobs at Heritage. If you read the post about Rubio’s anti-bailout bill, you already know what “risk corridor” means.

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That’s the final paragraph of this new letter from CMS to state insurance commissioners, who are understandably chilly towards the idea of an un-cancellation logistical clusterfark being dropped on the industry with six weeks left in the year. So are insurance company executives, of course; they’re meeting with Obama today to express their “concern.” So here’s a pot-sweetener for them from CMS in the nick of time: If they decide to un-cancel some plans and end up taking a beating financially from the adverse selection that results, Uncle Sam will be there to make everything right. I must have read three dozen blog posts yesterday wondering how O would be able to keep insurers on his side, working together with the White House to implement Healthcare.gov and the rest of the law, now that he’s gone and made them scapegoats for the cancellation mess. Turns out the answer’s simple. He’s going to buy them off. When, not if, healthy consumers avoid the exchanges and re-claim their old coverage instead, insurers will be indemnified to some greater or lesser (read: greater) degree by the “risk corridor” provisions. It’s a transitional bailout, essentially.

Makes sense — and yet I’m still a little surprised. I thought yesterday’s “fix” was all about theater for public consumption, not a legit policy idea that O wants to see implemented. That’s why he didn’t demand that insurers un-cancel plans; he merely gave them the option in the hope that they won’t (or can’t) do it, at which point he’ll happily blame the whole cancellation fiasco on them. By offering them a bailout if they do do it, he’s giving them an incentive to do it, which means more adverse selection problems and a very politically unpopular bailout headache for Democrats to manage. But maybe he has no choice at this point. He needs to offer the industry an olive branch and this is one way to do it. He’s still hoping they don’t un-cancel anything, but if they do, he has no choice but to quietly pick up the tab.


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