GAO Says Congress Can Stop Obamacare’s Health Insurer Bailout
Yesterday, the General Counsel of the U.S. Government Accountability Office (GAO) supported the requirement that the Administration needs appropriations to bail out insurers who lose money in Obamacare exchanges in 2015, via risk corridors:
HHS stated that it intends to begin collections and payments under section 1342 in FY 2015. However, as discussed above, for funds to be available for this purpose in FY 2015, the CMS PM appropriation for FY 2015 must include language similar to the language included in the CMS PM appropriation for FY 2014.
This is a very positive development towards protecting taxpayers’ from the unlimited liability to which Obamacare exposes us by protecting insurers’ income statements from losses in Obamacare exchanges. The Administration had assured us that the risk corridors would be budget neutral, but that was not written into the law.
However, the GAO also recognizes that the current Program Management (PM) appropriation collects “user fees” from insurers, and that “such sums as may be collected from authorized user fees … shall be credited to this account and remain available until September 30, 2019.” So, successfully limiting the bailout will require that Congress writes a very precise Continuing Resolution for the next PM appropriation.
This is a topic on which NCPA has had significant influence. On June 18, I testified in person at a hearing of the House Committee on Oversight and Government Reform. NCPA recently published my testimony as an Issue Brief, Risky Business: Will Taxpayers Bail Out Health Insurers?
Well after watching the video link of the testimony I can now understand why so many are confused. You so called experts need to stop using Obamacare to describe the ACA and stop co- mingling the terms “Health care” with “Health insurance”. I hope you understand the difference. However the taped evidence shows the contrary. Both Congressman and the experts panelists miss use the terms “Health care with health insurance” on several occasions.
health care noun
: the prevention or treatment of illness by doctors, dentists, psychologists, etc
health insurance noun
: insurance against loss through illness of the insured; especially : insurance providing compensation for
Did you mean to type “loss for words” instead?
Although I am vain, I am not going to go back and watch my entire testimony over again. Thank you for doing so. If we made the mistake you mention, we need to be on guard.
I have not read the testimony yet, and I am sure I am missing some key points……
but at first blush, John, I am puzzled by your anger against the risk adjustment programs.
The ACA required insurers to cover people on a guaranteed issue basis.
Therefore the government should subsidize an activity which would otherwise be money-losing.
Other advanced nations have used risk adjustment for decades. Medicare Advantage uses risk adjustment. It seems to me like the normal thing to do when you force insurers to lose money in a social cause.
If the risk adjustment costs money on a net basis, so what? If by contrast the federal government expanded Medicare to all the uninsurable risks, that would cost a lot more money than risk adjustment.
When individual states like New York and New Jersey required guaranteed issue and had no risk adjustment, premiums skyrocketed. Yes the liberals were defeated. So what?
I hear you. NCPA has long advocated “health-status insurance” which would get rid of the need for guaranteed issue and, therefore, risk adjustment.
Whether health-status insurance is do-able in practice is yet unproven. So, if we have individual insurance plus guaranteed issue we need risk adjustment. After all, it is in Medicare Advantage, which we support.
However, the risk adjustment should be entirely within the system, with “winners” subsidizing “losers.” It should not be an unlimited liability of taxpayers’.