White House weighing plan to extend ObamaCare’s “risk corridor,” i.e. bailout, program beyond 2016?

posted at 4:41 pm on February 18, 2014 by Allahpundit

The program’s supposed to be transitional, sunsetting in 2016 after the new exchanges have had a few years to launch and then stabilize.

Emphasis on “supposed to be.”

Industry insiders told the Washington Examiner a plan to extend the Affordable Care Act’s “risk corridors” are under discussion, but that administration officials have not made a final decision…

The Obama Administration is now weighing a plan to grant an additional three-year extension for non-complaint plans on the individual market. Such a move would prevent millions of people from losing their policies in the critical weeks and months before the 2014 election.

But it would also allow people on the individual market to keep non-compliant plans beyond the risk corridor’s 2016 expiration date, leaving health insurance companies serving the exchange vulnerable to financial losses as the more healthy customers continue to stay out of the exchanges.

Health insurance companies are looking for something in exchange for the three-year extension, which will make it much harder for them to sign up healthier and younger customers. Extending the risk corridor program is part of that conversation with the White House, industry sources said.

Remember back in November when Obama was eating truckloads of crap for breaking his “if you like your plan” promise? His solution was to let insurers “un-cancel” canceled plans — but lost in the hubbub at the time was the fact that he said he’d allow it for just one year. The obvious problem with that timeline is that it means this issue will bubble up again this fall, just in time for the midterms. New solution, then: Quietly allow insurers to keep un-canceled plans in effect past the midterms, for another three years. That’s how Obama just “solved” his little electoral problem with the employer mandate, isn’t it? Three-year extensions across the board, to minimize the damage to Democrats from his pet boondoggle in November. The problem is, because the old un-canceled plans are typically cheaper than expensive new “comprehensive” ObamaCare exchange plans, the extension means insurers are suddenly looking at less revenue than they counted on all the way through 2017. That’s where the “risk corridors” come in. Assuming the Examiner’s report is true, the White House is going to make this worth the industry’s while by extending the timeline for the bailout program too. Any losses they suffer in 2017 would, presumably, be partly offset by Uncle Sam even though the “risk corridor” is supposed to have terminated by then. Your tax dollars will buy insurers’ complicity in yet another illegal extension.

Bob Laszewski kinda sorta saw this coming, by the way. Last month he published a post arguing that, for all its faults, ObamaCare won’t cause a death spiral in the insurance industry anytime soon. The reason: The “risk corridor” program. Since Uncle Sam’s on the hook for any heavy losses in the industry, insurers are under no immediate pressure to raise premiums, the potential trigger of a death spiral. They can keep premiums artificially low — at least for a few years, until the “risk corridor” sunsets. Laszewski figured insurers would give the White House one more chance next year to get their act together on implementation and to start signing up the uninsured en masse; if they failed, he said, he expected companies to start parachuting out of the exchanges in 2016 before the “risk corridor” program expires. Which is to say, it’s very much in the White House’s interest to keep the program in effect, if it can, to keep insurers from abandoning the exchanges, especially if HHS has reason to think the risk pools they’re projecting will be less young and healthy than they had hoped. (And they do have such a reason at the moment.) The last thing Democrats need in a presidential election year is “Insurers give up on ObamaCare” headlines. Promise them some more sugar and you can avoid that. Maybe.

It seems naive at this point to ask whether the White House could extend the “risk corridor” unilaterally or whether that would be illegal. If they want to do it, they’ll do it regardless. O’s theory in issuing periodic delays or extensions for ObamaCare’s provisions is that, during the law’s transitional phase, he has some latitude legally to tweak implementation to make it go more smoothly. Extending the “risk corridors” past 2016, though, would mean the “transitional” phase had lasted past the end of his own presidency. It’s dubious, but it’s also in character. Here’s a question, though: Why would insurers leak this info now, when Marco Rubio’s trying to build support within the GOP for a bill to repeal the “risk corridor” program? He’s had little luck getting it on the leadership’s radar but his luck could change now that rumors are swirling that the bailout provisions might be extended into 2017 and beyond. The recent CBO numbers that found that the “risk corridor” could actually make money for taxpayers is a problem for the GOP, but (a) CBO’s numbers can be challenged and (b) CBO assumed that the “risk corridor” would be gone by 2016. Even if O decides to unilaterally extend the program, a new Republican Senate next year could join forces with some red-state Dems and Boehner’s House majority to repeal it, forcing Obama to either acquiesce in the repeal or to veto it and be seen as singlehandedly defending indefinite bailouts for insurers. Very strange that insurance industry sources, who stand to benefit, would be blabbing about this now.


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For individuals too?

obama hates the middle class and the poor.

Schadenfreude on February 18, 2014 at 4:42 PM

All your “sunsets” are belong to us!

geojed on February 18, 2014 at 4:42 PM

Rs who support the ins. co. bailouts, all to political Hades.

All who vote for it need to be politically pitchforked.

Go home, you traitors of the land!!!

Schadenfreude on February 18, 2014 at 4:43 PM

Every obama executive order must be nullified in minute one of a R presidency.

Otherwise be scroomed, badly, and have lemon juice poured on you, the highly concentrated version.

Schadenfreude on February 18, 2014 at 4:44 PM

I hope we don’t fail him. :(

Murphy9 on February 18, 2014 at 4:44 PM

This is precisely why the debt ceiling hike should have been held up for an end to the risk corridor. Stop it now before it becomes standard operating procedure.

blammm on February 18, 2014 at 4:45 PM

obama’care’ is soooo good that it needs propaganda ads to sell it, post-ponements into the next century and bailouts.

Leftists are imbecilic morons.

Schadenfreude on February 18, 2014 at 4:45 PM

obama is the dumbest oaf to ever inherit the WH.

Shame on the once great land.

Schadenfreude on February 18, 2014 at 4:46 PM

Perpetual bailouts for the insurance company partners of Obamacare…

…that’s change (and crony capitalism) you can believe in.

Athos on February 18, 2014 at 4:46 PM

May the sun never set on obama.

The stupid land deserves him in full. I hope he tears you all apart, dummies from both sides.

Such morons, in the majority, deserve NO less.

Work harder, fools. He needs your taxes.

Schadenfreude on February 18, 2014 at 4:46 PM

Pharaoh can do whatever he wants apparently.

ConstantineXI on February 18, 2014 at 4:47 PM

It seems naive at this point to ask whether the White House could extend the “risk corridor” unilaterally or whether that would be illegal. If they want to do it, they’ll do it regardless.

Yeah, but this a whole new level of illegal. He’s extending a window where the federal government is covering the insurance companies losses with taxpayer dollars. How can he keep replenishing that fund without Congress approving it? Where does he get the money from?

Doughboy on February 18, 2014 at 4:48 PM

It Was The Law

RickB on February 18, 2014 at 4:49 PM

Pelosi hardest hit

Schadenfreude on February 18, 2014 at 4:49 PM

Meanwhile, The House Schedules……Nothing

aquaviva on February 18, 2014 at 4:49 PM

Doesn’t the risk corridor budget authority expire after 3 years?

Unless Bam-Bam can now appropriate himself money, not seeing how this gets accomplished.

But Hell, I learned textbook civics, so what do I know.

matthew8787 on February 18, 2014 at 4:49 PM

This is precisely why the debt ceiling hike should have been held up for an end to the risk corridor. Stop it now before it becomes standard operating procedure.

blammm on February 18, 2014 at 4:45 PM

We all agree, but there are 30 or so members of the House who refuse to vote for ANY debt increase. Boehner didn’t have the votes for the underlying bill.

This always gets forgotten for some reason /s

matthew8787 on February 18, 2014 at 4:51 PM

Why Obama can NOT extend the individual mandate

Obamacare kicks in as of January 1, 2014

Non- complying insurance is void after March 31, 2104

Most, if not all, private policies terminate as of January 1, 2014

Obama can not simply extend the mandate for individual coverage for a year from January 1, 2014 to January 1, 2015 because the 50 million people who lost, or will lose, their coverage between January 1, 2014 and March 31, 2014 will have NO INSURANCE for the year …

These 50 million (or more) individuals will be required to accept the higher deductible, include the unwanted features and pay the higher cost of obamacare compliant coverage or go WITHOUT insurance coverage – PERIOD …

Think about it for a minute – how can any private insurance company continue coverage after March 31, 2014 that is NOT fully in compliance with obamacare regulations ? – they can NOT – it would be against the law – PERIOD ….

No insurance company is going to extend private coverage for a year with the additional requirements of obamacare for FREE, that is NOT going to happen – first, because it makes no economic sense, and second (and more importantly) because the law requires that they can NOT offer insurance in the exchanges that is not mandatory in ALL of their other policies

The only way out for Obama, the “D”s and the “R”s is to CHANGE THE LAW

Who among you think Obama, Hillary, Reid and Pelosi will allow the law to be changed?

Schadenfreude on February 18, 2014 at 4:53 PM

Doesn’t the risk corridor budget authority expire after 3 years?

Unless Bam-Bam can now appropriate himself money, not seeing how this gets accomplished.

But Hell, I learned textbook civics, so what do I know.

matthew8787 on February 18, 2014 at 4:49 PM

That’s what I’m saying. Sure, he’s already violated the Constitution before with the countless Obamacare delays, the defacto Dream Act, and the refusal to uphold the DOMA. But this is dangerous territory even by Obama standards. If he can write a blank check for billions of dollars without Congressional approval, then we’re essentially living in a dictatorship. What then can he not spend money on as he sees fit? And why are we even having debt ceiling hikes if that’s the case?

Doughboy on February 18, 2014 at 4:53 PM

As I go into a somnolent state caused by O’care overload, I sense a risk corridor, but, instead, see clearly the light of an oncoming train…

vnvet on February 18, 2014 at 4:55 PM

forcing Obama to either acquiesce in the repeal or to veto it and be seen as singlehandedly defending indefinite bailouts for insurers.

He is always a 1%r. The sheepledom just doesn’t know it.

Very strange that insurance industry sources, who stand to benefit, would be blabbing about this now.

Not at all. They know how culpable they are having fooled an entire land. Maybe they are nervous that not all the people are sheep.

Schadenfreude on February 18, 2014 at 4:55 PM

It’s only money guys, what’s the problem?
/
Just in case the newbies think I’m serious.

D-fusit on February 18, 2014 at 4:56 PM

So what happens after the elections in 2014 and 2016? Yup, all hell breaks loose and the D’s probably retain power…. Happy Days….

sandee on February 18, 2014 at 4:56 PM

The ins. companies also know how the D thugs can be exposed for sustaining the bad guys and they are not so sure that obama will keep them above the bus.

Schadenfreude on February 18, 2014 at 4:56 PM

“Have Yellen print more” — any D dummy

Schadenfreude on February 18, 2014 at 4:57 PM

Still don’t think the S.T.O.P. Act is at least politically viable, AP? With this and the EPA’s new massive regulations, I’d say there is more than enough fertile ground to attack this administration’s continual shredding of the constitution.

cdog0613 on February 18, 2014 at 5:10 PM

“I won!”

pain train on February 18, 2014 at 5:15 PM

Its the law 6 months ago

Meh now

-left/lsm

If w did this part 23,653

cmsinaz on February 18, 2014 at 5:17 PM

pathetic, the whole Lot of them…

Oh, here you go ladies….OT:

http://www.youtube.com/watch?v=QumxOQganfo

ToddPA on February 18, 2014 at 5:19 PM

Boy is Dr K going to have a fit on special report

cmsinaz on February 18, 2014 at 5:21 PM

The “Black Hitler” thinks he can do anything he wants and the Vichy Republican Establishment just sits there with their collective thumb up their collective ass.

VorDaj on February 18, 2014 at 5:22 PM

I haven’t heard this pointed out, and it should be:

The real losers in the employer-mandate delay are the individual purchasers, the 5% or so that buy their own insurance. By delaying the 80% or so that get it through their employer, the problems individual buyers are finding with fake networks and doctor reimbursement rates that doctors won’t accept will not be forced into a resolution.

If the 80% were suddenly dumped into the fake networks, the system would blow up. Of course that’s what the REB is avoiding here. But the big losers are the individual buyers.

slickwillie2001 on February 18, 2014 at 5:26 PM

It is NOT correct to refer to risk corridors as “bailouts.”

A bailout is when a private company screws up and the taxpayers come in to save them. Like GM & Chrysler. That is NOT what is happening here.

The risk corridors were set up to ensure the insurers that participating in the exchanges wouldn’t mean they get stuck with a bad pool due to adverse selection and other defects in the system’s design. It’s like insurance for the insurers and was written into the law, at least the three years was. Without it, no insurance company would have undertaken the risk.

It’s not a bailout to guarantee someone a stop-loss. And the insurers will lose money before they get any reimbursement, it doesn’t cover all losses.

What is fundamentally dishonest is what Rubio and some others are trying, to change the rules to screw the insurers after baiting them in with the promise of the risk corridors.

The law doesn’t permit the risk corridors to operate beyond three years, so the extension is just one more example of Obama ruling by decree. But that still doesn’t make the risk corridors a “bailout.”

Honest people should stop referring to them as such.

Adjoran on February 18, 2014 at 5:34 PM

We have passed through the following stages of BarryCare:

Stage One: Donks lying their asses off about how great and inexpensive it’s going to be.

Stage Two: Donks stuffing it up America’s ass.

Stage Three: Donks lying about how they didn’t see what a disaster it would be.

We are now in…

Stage Four: Donks saying that, like every other mega-entitlement they have created since the new deal, dump-truck loads of money are now necessary to get it to “work right.”

Spurius Ligustinus on February 18, 2014 at 5:34 PM

+1 SL

cmsinaz on February 18, 2014 at 5:38 PM

Nobody really believed the death spiral stuff knowing full well that obamacare is first and foremost, a government entitlement, not the free market. As such, free market dynamics don’t apply.

This is why Obamacare can not fail anymore than medicare can fail. The insurance companies are just skimming their profit off the top, making socialized healthcare just that much more expensive.

HugoDrax on February 18, 2014 at 5:40 PM

If the medical insurance companies like their bailout program, they can keep it.

Socratease on February 18, 2014 at 5:47 PM

Wait! A budget reconciliation bill needs a bailout???!!

Seems to me the Dems don’t understand what “budget neutral” means.

Axeman on February 18, 2014 at 5:55 PM

It’s a TARP!

ACA legislation says whatever he wants it to say. Welcome to America.

xNavigator on February 18, 2014 at 6:11 PM

Given that: “IN GENERAL.—The Secretary shall establish and administer a program of risk corridors for calendar years 2014, 2015, and 2016 under which a qualified health plan offered in the individual or small group market shall participate in a payment adjustment system based on the ratio of the allowable costs of the plan to the plan’s aggregate premiums.”

How can you say:

It seems naive at this point to ask whether the White House could extend the “risk corridor” unilaterally or whether that would be illegal. If they want to do it, they’ll do it regardless

the drill sgt on February 18, 2014 at 6:17 PM

now weighing a plan to grant an additional three-year extension for non-complaint plans on the individual market

Excuse me, but State Insurance Commissions determine if those ‘evil, cheap’ non-compliant insurance plans remain. The People’s Republik of Kalifornia has determined that those plans are GONE. NEVER TO RETURN.

Or is King Barack the Magnificent now going to rule at the State level?

GarandFan on February 18, 2014 at 6:37 PM

Saw Trey Gowdy on Fox a day or so ago saying the days of no consequences for Obama’s flouting of the laws are over.

He promised during the appropriation process this spring that the House will be de-funding a lot of Obama’s pet projects. He specifically mentioned “green initiatives.”

bluesdoc70 on February 18, 2014 at 7:49 PM

If the Republicans miss the opportunity to deal with this, before the election, we’ll know the establishment is in the pocket of the insurance companies.

Personally, I don’t feel sorry for the insurance companies. They got in bed with Obama and the Democrats, listening to the promises of wealth and fame, and now that it’s not there, they’re hoping for a bailout from the taxpayer. This is one of those little hidden things “We have to pass the bill so we know what’s in it.” things that, once you find out what’s in it, you deal with it.

If the House deals with it and Reid doesn’t bring it up, it’s a campaign issue. If the House doesn’t deal with it, it’s still a campaign issue, except it’s the tea party running against the establishment. Either way, the Republicans need to do something about this.

bflat879 on February 18, 2014 at 8:01 PM

Yeah, but this a whole new level of illegal. He’s extending a window where the federal government is covering the insurance companies losses with taxpayer dollars. How can he keep replenishing that fund without Congress approving it? Where does he get the money from?

Doughboy on February 18, 2014 at 4:48 PM

Obama’s stash, silly.

307wolverine on February 18, 2014 at 8:01 PM

It continues to amaze me, the silence of the MSM lambs over these epochal lawless decrees by this madman.

Who is John Galt on February 18, 2014 at 8:54 PM

I grew up an LA Laker fan all throughout the “showtime” years. With that being said, I’ve lost all respect for Magic Johnson because of his latest propaganda-riddled Obamacare ad. I was disgusted to see him peddle this ACA atrocity. What’s worse, the sheeple will believe him.

kennethRY on February 19, 2014 at 10:12 AM