Risk Corridor and Obamacare

Risk Corridor and Obamacare.  What does this mean?

According to a review of medical claims from the Blue Cross Blue Shield Association,  new health insurance customers (starting in 2014) had higher rates of diabetes, depression and high blood pressure than people who had coverage through employer policies. People who finally had health insurance also visited the emergency room much more frequently than people who had private, individual coverage before Obamacare.

As an insurance broker I have clients who had gone without health insurance for many years and were thrilled to get good, affordable coverage through Obamacare. But a majority of those folks also had health problems that needed to be addressed – once they had health insurance to pay for the tests, procedures and operations.  These folks were expensive for their insurance company.

This is where the Risk Corridor Program was meant to help out. Risk corridors are generally used to mitigate an insurer’s pricing risk. Under Obamacare, risk corridors were established for the law’s first three years as a safety-net for insurers who experienced financial losses.

But along came presidential candidate Marco Rubio who decided to attack this protection (or “bailout” as he called it) for health insurance companies.  I recently wrote about how Rubio and Republicans went after the Risk Corridor Program as a way to kill Obamacare – and how it is working:  The End of Health Insurance in Arizona.

Now insurance companies are fighting back  to try to get money the government promised them.  Several companies are suing the federal government claiming CMS (Centers for Medicare and Medicaid) broke the contract they had with insurance companies that offered policies with no pre-existing condition exclusions.

Even the Wall Street Journal is defending the Risk Corridor Program.

Over the past several years, much has been said about the politics of health-care reform. However, Sen. Marco Rubio’s criticism of risk corridors associated with the Affordable Care Act (“ObamaCare: A Crony Capitalist’s Best Friend,” op-ed, May 25). and other criticism on these pages of the private health insurance industry are misguided.

When Congress passed the health reform law, it included a temporary three-year transition program to mitigate disruption to consumers in the early years of the new insurance market. This risk corridors program is a time-tested policy that has been used on a bipartisan basis as part of many insurance initiatives, including Medicare’s highly successful prescription drug program.

Health plans responded to the law and the subsequent federal and state regulations as required. Coverage options for millions of Americans were developed based on the rules that were in place. Unfortunately, as a result of the shortfall in the risk corridors funding, more than 800,000 Americans across the country have faced disruptions in coverage, health plans have had to reduce benefits and options, and several had to close their operations entirely.

No matter the party, everyone shares the goal of ensuring affordable access to health care. We believe the private insurance market is the best way to deliver choice and quality for consumers. That will require Congress to move forward with bipartisan solutions that protect consumers and promote a stable, affordable market for all Americans

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