We all know about the “risk corridor” at this point, yes? Designed to spread the risk of budget overruns among insurers, it could end up as a mechanism for a federal bailout of the industry if the ObamaCare exchange risk pool ends up being much older and sicker than everyone expects. When King Barack declared that he’d allow insurers to un-cancel old plans, notwithstanding what the ObamaCare statute has to say about it, he increased the odds of that bailout being necessary by allowing healthy people to leave the exchange risk pool (temporarily) and revert to their old, cheaper coverage. That means less revenue for insurers, which of course makes budget overruns for the exchange plans more likely. How could O possibly make it up to them?
You know how. A day after Obama announced his “fix” that doesn’t actually fix anything, CMS sent a letter to insurers reassuring them that the agency would “explore ways to modify the risk corridor program final rules to provide additional assistance.” Translation: The feds are going to shovel a little extra taxpayer money their way to cover the extra cost imposed by O’s buck-passing, ass-covering, eleventh-hour attempt to keep his “if you like your plan” promise after all. And now, here it is:
The U.S. government has issued a proposal that would likely increase risk payments in 2014 to health insurers offering plans on the Obamacare exchanges after the companies complained a recent policy change allowing people to keep their insurance policies had changed the financial equation.
The rule, published on Monday in the Federal Register, lowered the threshold at which risk payments kick in for the sickest health plan members. The government proposed paying insurers 80 percent of claims greater than $45,000 in 2014. Previously the lower limit was $60,000…
In addition, the government has proposed a state-specific adjustment for risk payments based on how many people in the state extend their current polices, Citibank analyst Carl McDonald explained in a research note.
Insurers thought they’d have enough profit flowing in from healthy people who’d been forced onto the exchanges that they wouldn’t need federal help in paying off claims below 60 grand. Thanks to Obama’s need to protect himself and his party politically, that calculation has now changed — and your money will make up the difference. If you’re one of the lucky few million who’s received a cancellation notice this year, that means you’re one of the law’s “losers” twice over. Happy Thanksgiving.
Oh, almost forgot: The feds don’t have a way of transmitting these individual risk payments to insurers yet because … that part of the ObamaCare website hasn’t been built yet:
Beyond the troubles with enrollment forms, which have been evident since the marketplace opened on Oct. 1, insurers are anticipating problems if IT workers from the government and outside contractors cannot soon build other parts of the online system that are running behind schedule.
For instance, starting in mid-December, the government and each participating insurance company are supposed to perform a monthly “reconciliation,” to make sure that each side has the same list of new customers, the benefits chosen by the consumers and the government subsidies for which they qualify. That feature of the online system, however, has not been built, according to people close to the industry and government officials.
Nor can the system handle another feature, scheduled to be ready when health plans take effect on Jan. 1, in which insurers are to be paid extra government money, through a method known as “risk corridors,” if their new customers are old and require expensive medical care. “It’s not built, let alone tested,” the industry official said.
Other parts of Healthcare.gov still aren’t working — uploaded ID documents have been known to disappear into the ether, as have “orphaned” enrollment records — but at least there’s some sort of infrastructure in place for those. The back end, where insurers receive data and money from the feds, represents the 30-40 percent of the exchange that still needs to be built from scratch. Show of hands: Who’s not-so-secretly enjoying watching the insurance industry learn what it means to partner with Barack Obama?