WaPo: ObamaCare risk corridor taxes pull a “reverse Robin Hood”

posted at 4:41 pm on January 14, 2016 by Ed Morrissey

Remember “risk corridors”? Democrats and Barack Obama set them up in the Affordable Care Act to indemnify insurers against higher-than-predicted utilization rates in the first few years of ObamaCare, to keep them afloat while premiums stabilized. Marco Rubio pushed to pass a rider in the “cromnibus” to prevent appropriated funds from being used to supplement risk-corridor payments, forcing HHS to use only taxes collected from insurers for payments. The restriction on funds ended up pushing most ObamaCare-created co-ops out of business, as they could not survive without significant federal subsidies.

That outcome may get a closer look now that the restrictions on payouts shows an odd tilt in subsidies. As the Washington Post’s Amy Goldstein reports, the program now looks more like a wealth transfer, but one that shifts funds from smaller insurers to larger insurers. Viva Health in Alabama just got socked with a $1.7 million tax bill, or about 40% of all the premiums they have collected on the ObamaCare exchange. Guess who got the risk-corridor subsidy payments based on those taxes?

The goal is to help keep insurance markets stable by sharing the “risk” of sicker people and removing any incentive for plans to avoid individuals who need more medical care. Such stability is likely to encourage competition and keep overall prices lower for consumers, while its absence can undermine both and limit coverage choices — the basic principles of the law.

Yet the way the Obama administration has carried out this strategy shows another unexpected consequence of the 2010 health-care law. The administration defends its approach, but critics say the “risk adjustment” program is having a reverse Robin Hood effect — taking money from some plans that are small, innovative or fast-growing, while handing windfalls to some of the industry’s most entrenched players.

Indeed, Blue Cross and Blue Shield of Alabama, which dominates the market in which Viva sells, is getting more than $2.5 million.

What. A. Shock. Government steals from smaller players in a market through regulation and taxes and gives it to larger players in a market? Why, it’s as if the larger players in the market use government regulation as rent-seeking behavior designed to stifle competition. Whodathunkit?

Is that what happened to the ObamaCare co-ops too? Did they get squeezed out by the need to provide payments to the larger insurers in their markets after HHS could no longer raid its appropriated funds to keep them afloat? It might be interesting for some enterprising analyst to look at each of those markets and find where the risk-corridor payments went.

However, this “reverse Robin Hood” isn’t unique in ObamaCare. The entire structure of the risk pools depended on the individual mandate to force younger and healthier people into purchasing comprehensive insurance plans they wouldn’t come close to fully utilizing. The overpurchase of insurance on a massive basis was supposed to subsidize the cost of sicker and older people entering into the system after eliminating pre-existing condition pricing that reflected actual risk. Given that younger people are usually significantly less wealthy than older people, this entire strategy was predicated on picking the pockets of poorer people through outright fraud in order to allow wealthier people — and more politically powerful people — to save cash.

Speaking of Robin Hood … rest in peace, Alan Rickman. He’s about the only entertaining part of Robin Hood: Prince of Thieves, but he’s much better known for better films: Die Hard, Harry Potter, and the deliciously satirical Star Trek takedown, Galaxy Quest. “… and Cancel Christmas!” Indeed, indeed.


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Comments

Nice touch – slipping in a pic of Alan Rickman.
RIP.

dentarthurdent on January 14, 2016 at 4:46 PM

dentarthurdent on January 14, 2016 at 4:46 PM

I noticed that, too.

My favorite Rickman character is Colonel Brandon.

lineholder on January 14, 2016 at 4:51 PM

Hans Gerber or Bob Clay RID, whatever is fake name was in Die Hard.

I really liked him in Galaxy Quest. He is yelling a Tim Allen, on why Allen doesn’t acting seriously. All the time was Allen is fighting the pig lizard.

Oil Can on January 14, 2016 at 4:54 PM

Bowie and Rickman. Both Brits. Both 69. Both lost to cancer this week.

2016 is not off to a good start.

Doughboy on January 14, 2016 at 4:55 PM

Wow. It’s like I just woke up in the pages of Atlas Shrugged. We are all Reformed Amish now and should claim our exemption from the mandate.

kringeesmom on January 14, 2016 at 5:02 PM

Speaking of Robin Hood … rest in peace, Alan Rickman.

He edited and directed the blood libel My Name Is Rachel Corrie for the stage.

cbenoistd on January 14, 2016 at 5:07 PM

Did anyone seriously think that the Big Insurance Guys who wrote Obamacare-tastrophe (wait… you didn’t believe a bunch of politicians wrote it, did you?) would not construct a pay-out structure that flanneled their oligarchic butts in 100% of profit/loss scenarios?

Wasn’t this the point of O’say-can-you-see-my-doctor?care in the first place? Government gets control, big donors get the pay-off.

Dolce Far Niente on January 14, 2016 at 5:07 PM

Really Obamacare is a disaster?

I have a friend who retired from a major union. Had a great union provided health plan, all of sudden his premiums have tripled and no place to go. Worse for him, now the only places that accept his care are each over 100 miles away. Even the unions, Obama’s buddies have gotten screwed. And just wait till we hear the screaming from those whose tax returns are being confiscated.

What a joke. Horrible bad joke.

Neitherleftorright on January 14, 2016 at 5:11 PM

Alan Rickman. Not quit sure who he was until I saw the Robin Hood credit. Some of the best acting I have ever seen. I really admire someone who can play the bad guy well anyway and he was really funny. The loved leading man has to be much easier. Loved it. RIP.

CW20 on January 14, 2016 at 5:14 PM

Meanwhile… JustUS Benedict Roberts smirks at his treachery.

viking01 on January 14, 2016 at 5:16 PM

By Grabthar’s Hammer, you shall be avenged!

playblu on January 14, 2016 at 5:19 PM

Bowie and Rickman. Both Brits. Both 69. Both lost to cancer this week.

2016 is not off to a good start.

Doughboy on January 14, 2016 at 4:55 PM

Lemmy a few weeks ago also

Motorhead – Ace Of Spades

celt on January 14, 2016 at 5:21 PM

Ed –
Nice touch/tribute with that Alan Rickman photo.
I met him once.
Much nicer than Snape.

verbaluce on January 14, 2016 at 5:24 PM

OT: Dear Leader releases 10 Gitmo prisoners the day after we get 10 US Navy sailors back from Iran…???

d1carter on January 14, 2016 at 5:24 PM

predicated on picking the pockets of poorer people through outright fraud in order to allow wealthier people — and more politically powerful people — to save cash.

BS, my cousin and her husband are in their early 60s, both make good money are self employed and their premiums doubled as did their deductible. I think they’re paying around 9k a year for their non-subsidized O’care policies and have a 12k deductible if they ever need to use that insurance.

celt on January 14, 2016 at 5:27 PM

OT: Dear Leader releases 10 Gitmo prisoners the day after we get 10 US Navy sailors back from Iran…???

d1carter on January 14, 2016 at 5:24 PM

Dog Eater probably threatened to send them Chelsea and they figured for once Ogabe might be serious.

viking01 on January 14, 2016 at 5:32 PM

Robin Hood robbed from the Government and gave back to the poor

halfbaked on January 14, 2016 at 5:40 PM

Hans, *bubby*, I’m your white knight.

The Notorious G.O.P on January 14, 2016 at 5:41 PM

By Grabthar’s Hammer, you shall be avenged!

playblu on January 14, 2016 at 5:19 PM

“By Grabthar’s Hammer…what a savings.”

rvastar on January 14, 2016 at 5:41 PM

Lemmy, Bowie, and Rickman…the Curse of 3’s.

rvastar on January 14, 2016 at 5:43 PM

If only the WaPo actually understood that the Robin Hood story is about taking tax revenue from the government and returning it to the people.

Quirt Evans on January 14, 2016 at 5:45 PM

R.I.P., Alan Rickman. One of my favourite actors.

Gelsomina on January 14, 2016 at 5:50 PM

I noticed that, too.

My favorite Rickman character is Colonel Brandon.

lineholder on January 14, 2016 at 4:51 PM

+1
https://m.youtube.com/watch?v=Cpmtkn9XKOM

MontanaMmmm on January 14, 2016 at 5:52 PM

Great touch throwing in Alan Rickman. People would MUCH rather remember a fave actor than a government inspired theft program.

vnvet on January 14, 2016 at 6:17 PM

ObamaCare risk corridor taxes pull a“reverse Robin Hood” ?

But we already knew that … it takes from EVERYBODY and gives it to the government.
.
That’s what a “reverse Robin Hood” is, if you’re being true to the original ‘story line’.

listens2glenn on January 14, 2016 at 6:31 PM

Just give us 2 years with the WH and House and Senate and we’ll put the final nail in the Obamacare coffin.

RIP Alan Rickman

COgirl on January 14, 2016 at 6:31 PM

Rickman also did the voice of Marvin, the robot, in the movie, “Hitchhiker’s Guide to the Galaxy.” The movie was OK, but his character was great, really funny.

iurockhead on January 14, 2016 at 7:11 PM

He edited and directed the blood libel My Name Is Rachel Corrie for the stage.

cbenoistd on January 14, 2016 at 5:07 PM

I wondered if I were the only one to remember that piece of Alan Rickman’s work.

RJL on January 14, 2016 at 7:25 PM

Really liked him in Bottle Shock as well.
Decent movie about Napa Valley wines getting noticed by the world.

dentarthurdent on January 14, 2016 at 8:37 PM

Departures have already begun. A decades-old South Florida HMO, Preferred Medical Plan, had the lowest premiums in Dade County for 2014 and received a risk-adjustment bill of $97 million. “You have to scratch your head,” said its president, Albert Arca.

WTF!? Working as planned.

Patriot Vet on January 14, 2016 at 8:39 PM

RIP…always good at playing the bad guy….it takes talent.

jaywemm on January 14, 2016 at 11:36 PM

Also, for what it’s worth: Rickman–credited as “A Strolling Player” on the album notes–was the vocalist on the “introduction of the instruments” section in Mike Oldfield’s “Tubular Bells 2.”

Other than develop a fat-free brownie that tastes good, was there anything Rickman didn’t do?

Archangel Nation on January 15, 2016 at 1:29 AM

My favorite line from Robin Hood:
Sheriff of Nottingham: Locksley. I’ll cut your heart out with a spoon.
after the fight…
Guy of Gisborne: Why a spoon, cousin? Why not an axe?
Sheriff of Nottingham: Because it’s DULL, you twit. It’ll hurt more.

And, it’s exactly what I think many would like to do to those who gave us 0bamaCare – from both sides of the aisle.

GWB on January 15, 2016 at 9:31 AM

Nice semantical gymnastics Ed. The risk corridors “steal” from those making excess profits and give to those that are losing money. So unless “poor” = “profitable” and “rich” = “unprofitable”, this is the opposite of the reverse Robin hood effect.

gengwall on January 15, 2016 at 9:59 AM

Yet the way the Obama administration has carried out this strategy shows another unexpected consequence of the 2010 health-care law.

That’s the lie at the core of everything. And everyone knows it’s a lie, too.

But the people who support it don’t care as long as they get the result they want. And since they’re comfortable lying to you in the first place, they’ll continue to lie by calling it “unexpected” and acting offended when you call it “planned.”

The fact that the people who don’t support it tend to resent the lie as much as they resent ObamaCare itself just makes it all sweeter for them.

GrumpyOldFart on January 15, 2016 at 10:40 AM

Given that younger people are usually significantly less wealthy than older people, this entire strategy was predicated on picking the pockets of poorer people through outright fraud in order to allow wealthier people — and more politically powerful people — to save cash.

Bug or feature?

wagnert in atlanta on January 15, 2016 at 11:04 AM

+1000 for the picture accompanying this article on the homepage, Ed.

Nice semantical gymnastics Ed. The risk corridors “steal” from those making excess profits and give to those that are losing money. So unless “poor” = “profitable” and “rich” = “unprofitable”, this is the opposite of the reverse Robin hood effect.

Way to completely ignore the fact that small insurers are being targeted by big companies that have the clout to sway politicians. So much for choice and markets, etc.

My favorite line from Robin Hood:
Sheriff of Nottingham: Locksley. I’ll cut your heart out with a spoon.
after the fight…
Guy of Gisborne: Why a spoon, cousin? Why not an axe?
Sheriff of Nottingham: Because it’s DULL, you twit. It’ll hurt more.

And, it’s exactly what I think many would like to do to those who gave us 0bamaCare – from both sides of the aisle.

GWB on January 15, 2016 at 9:31 AM

+1000 as well.

englishqueen01 on January 15, 2016 at 4:27 PM