How Government is Backing up the Health Insurance Companies
It looks like the government will share in 50% of the profits and pay for 80% of the losses.
And the CBO (ignoring the possibility of a death spiral) scored this reinsurance agreement as budget neutral.
More from Adrianna McIntyre:
Insurers have a stake in ObamaCare’s success; that doesn’t magically disappear if 2014 enrollment is rockier than anticipated. The risk corridor program continues through 2016, which would allow plans to weather 2014′s uncertainty and probably keep the following year’s premiums relatively unchanged as the risk pool normalizes.
On the slow road to bankruptcy
Actually, I would say we’ve been in the fast lane lately
If congress would only accept a budget. /sigh
Last time one was proposed was 2008 and it was shot down by almost unanimous consent.
“Basically, today’s worst-case scenario is that HealthCare.gov takes months to fix and the mandate is delayed until 2015, resulting in widespread adverse selection.”
This would definitely be, not good.
years of torment and waiting
Such is government, Id much rather it just be decided also
The real risk of delaying the individual mandate is long-term political fallout from Obamacare being labeled a “fiasco”, not the dreaded insurance death spiral.”
Finally someone understands
With enough time, it will spiral. The entire program is doomed. We can only hope it doesn’t take the country with it.
It looks like the government will share in 50% of the profits and pay for 80% of the losses.
That sounds affordable.
It looks like the government will share in 50% of the profits and pay for 80% of the losses.
When a risk-taking entity internalizes only half of positive benefits (i.e. profits) but suffers only one-fifth of the losses, they have an incentive to take huge risks. I’m not in favor of any government support. But an arrangement where the insurers got half the profits but 80% of the losses would be better.
Every other advanced nation that uses private insurers also uses risk adjustment schemes of this nature. (Germany, Switzerland, Holland, et al.)
For that matter, Medicare Advantage uses risk adjustment here in the USA.
The lack of risk adjustment is a main reason why US carriers jump in and out of markets, not only in health but also in LTC insurance.
This does NOT mean that I am endorsing the ACA version of risk adjustment. I do not know enough about it.
But the existence of a program is not cause for alarm.
Health insurance will not be stable with pure laissez faire.