Just a small smackerel of potentially very costly ObamaCare regulatory minutiae for a Friday afternoon, you know — the usual. Via the ever-vigilant Philip Klein at the Washington Examiner, it appears that the Obama administration felt the need to reassure insurance-industry lobbyists that the “risk corridor,” a.k.a. bailout, provision included in the president’s crowning legislative achievement will without a doubt be there to catch them if and when they fall.
The risk corridors are designed to siphon money away from the insurance companies that find themselves doing well in the law’s first years and redistribute it to insurance companies that find themselves struggling to keep premiums down whilst making ends meet, and while the administration has been blithely assuring critics that the provision will absolutely be budget-neutral, that promise of neutrality has been raising alarm among insurers worried that there won’t be enough money there if they end up having to charge “unexpectedly” high premiums and they suddenly need cash — prompting the administration to announce that it will find “other sources of funding” if push comes to shove. How nice.
The news, buried in a 435-page regulatory filing by the Centers for Medicare and Medicaid Services, undermines prior assurances by the administration that the program would be budget-neutral. …
In revised final guidance, CMS reiterates the intention for the program to be budget-neutral. However, the regulations provide added reassurance to insurers.
“As we stated in the bulletin, we anticipate that risk corridors collections will be sufficient to pay for all risk corridors payments,” the CMS document reads. “That said, we appreciate that some commenters believe that there are uncertainties associated with rate setting, given their concerns that risk corridors collections may not be sufficient to fully fund risk corridors payments. In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers. In that event, HHS will use other sources of funding for the risk corridors payments, subject to the availability of appropriations.”
As Peter Suderman points out at Reason, CMS doesn’t mention what those other sources of funding might be, and it certainly doesn’t seem like there are any currently available/appropriated “other sources of funding” for the risk corridor payments. If push does come to shove, I rather highly doubt Congress is going appropriate any, no matter how hard the administration intones that Republicans are intentionally sabotaging their otherwise awesome law. So… is this just an empty reassurance for insurers while the Obama administration is livin’ on a prayer that everything works out according to plan, or does the Obama administration have other extralegal ideas in mind, as they have for so many of ObamaCare’s other troubles? Either way, I don’t like it. Not one bit.
Join the conversation as a VIP Member