Obamacare payment to insurers $2.5 billion less than expected


Kristina Ribali:

Reneging on previous promises and guarantees, the federal government has decided to short insurance companies out of billions of dollars agreed to under Obamacare.

The Washington Examiner reports that, “Insurers learned late Thursday that they’ll receive just $362 million out of the $2.9 billion” they had requested from Obamacare in 2014. Why? Because Obamacare “hasn’t brought in nearly as much money as it needs to pay out.”

Unfortunately for insurance companies, they have enrolled higher numbers of older and sicker customers than anticipated. The Obama Administration promised the insurers federal funds “to help cover their costs, through a program known as risk corridors.”

Here’s how the program was supposed to work:

If a health plan found itself with at least 3 percent more medical claims than it had anticipated, the government would reimburse it for half of those losses. If claims surpassed expectations by more than 8 percent, the government would pay 80 percent of the losses.

However, “the law requires the program to be budget-neutral, meaning that if there aren’t adequate funds, insurers have to go without.” There’s the fine print that is the crux of the problem.

The response from the insurance industry  (hoping to see a boon to their bottom line under Obamacare) was harsh and swift.

“Stable, affordable coverage for consumers depends on adequate funding of the risk corridor program,” said Marilyn Tavenner, CEO of America’s Health Insurance Plans. “It’s essential that Congress and CMS act to ensure the program works as designed and consumers are protected.”

Notice the line, “stable, affordable coverage for consumers.” Many Obamacare enrollees would say that coverage has been anything but stable and affordable so far. Rates for plans offered through Obamacare are continuing to climb, and that doesn’t seem likely to change. With the loss of these expected funds to help prop up the bottom line of these insurers, further price increases in Obamacare plans are certain.

Read more

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments

Just wait until 2017 when the risk corridors expire

agree with drjohn, ’17 will explode the top of this farce. America is clueless but the food did and congress-

Other than the statement about wanting to fundamentally change the country, everything that has come out of this man’s mouth has been a lie so this should be no surprise. The millions who are still uninsured are in violation of federal law and are therefore criminals based on the criteria established by the socialist dems. When are they going to be brought to justice?

@another vet –

“The millions who are still uninsured are in violation of federal law and are therefore criminals based on the criteria established by the socialist dems. When are they going to be brought to justice?”

There is no mechanism to penalize those who remain uninsured. Most of those who are uninsured are largely the very poor. They earn so little, they do not file a federal tax return. (Depending upon the state these people reside in, they may or may not be required to file a state return.) As such, they are not subject to Obamacare requirement to be insured or be enrolled in Medicaid. Then, there is the category of uninsured where they do not qualify to be insured but yet earn too much to be enrolled in Medicaid. This latter category is substantial through anecdotal reports. The IRS said there is not enough manpower in the world to send enforcement agents to arrest, or conduct audits of, those without insurance.

@David: The neo-socialists who shoved this monstrosity down our throats should be made to publicly explain why they chose criminalize that portion of our population and then explain why they are not enforcing their law. It should prove to be quite entertaining.

@another vet: They didn’t intend for it to be enforceable, they only intended for it to be chaotic. They succeeded.

Now add in the money those states stupid enough to have expanded medicaid will now have to cover.

How long would any private company that ended up shorting customers. $2.5 billion – essentially defaulting on a contractual obligation – avoid criminal charges?