UnitedHealth Group’s proposal (threat? promise?) to withdraw from Obamacare’s health insurance exchanges, and the failure of Obamacare’s COOPs are both events which NCPA has been predicting for a long time (see here and here).

Two years ago, we identified Obamacare’s “risk corridors” as a vehicle through which the Administration would expose taxpayers to unlimited liability for insurers’ losses in Obamacare. Due to our research and testimony, Congress prevented this exposure last December.

What with the exchanges unravelling so quickly, we are not surprised to learn that lobbyists are pressuring Congress to restore unlimited liability. We joined a broad-based coalition to write a letter to Congress urging the current policy be maintained.

Obamacare must be completely renegotiated from root to branch. Just handing taxpayers’ money to insurers for losses they incur will not solve the problem.

Read the entire letter here.

I reported earlier this week that the Obamacare Marketplace is slowly failing. Three days later the largest health insurer in America, UnitedHealth Group, announced it expects to lose $500 million on exchange plans next year and may exit the market in 2017.

Continue reading Large Insurer May Exit Exchange: The Exchange System is Collapsing Under its Own Weight →

Last December, I discussed with some relief that Congress had stopped the unlimited taxpayer liability of Obamacare’s risk corridors, which protect profits for health insurers by transferring money from insurers with extra profits to those whose profits from Obamacare are less than expected.

The CROmnibus, which funded the government for 2015, put a guardrail around the risk corridors by legislating that any payments beyond budget neutrality would have to be appropriated. (That is, if extra profitable insurers earned $100 “too much” and losing insurers lost $200 “too much”, the winners could pay the losers $100, but the U.S. Treasury could not just make up the balance without Congress appropriating the funds.)

Well, Standard & Poor’s has just concluded that payments from extra profitable insurers will only fund 10 percent of risk corridor payments: Continue reading Obamacare’s Risk Corridors Are Back, And Bigger And Badder Than Ever! →

One of NCPA’s successes in health policy last year was to influence the Congress to limit Obamacare’s “risk corridors”. This was the part of the 2010 Affordable Care Act that instituted an unlimited taxpayer liability to protect health insurers from losing money in Obamacare’s exchanges for three years.

Sean Parnell of the Heartland Institute interviewed Senior Fellow John R. Graham about the effect of the lame-duck Congress eliminating this unlimited taxpayer liability. You can listen to the 20-minute podcast here.

For a written description of this important win, please see here.

Actuaries at Milliman have published a new report on the consequences of the CROmnibus preventing health insurers from dipping into taxpayers’ funds to finance Obamacare’s risk corridors. The entire seven pages is well worth reading.

NCPA’s research on the open-ended liability presented to taxpayers by the risk corridors was a factor in the lame-duck Congress’ decision to limit the potential payouts to insurers with unexpected losses to (no greater than) the amount collected from insurers with unexpectedly high profits ― so-called “budget neutrality”.

Although giving their report the title “No New Hope”, Milliman’s actuaries are not entirely pessimistic about insurers’ ability to get taxpayers’ funds out of the risk corridors. Indeed, they note that the CROmnibus comprises only one piece of an increasingly complicated legislative and regulatory trail.

Continue reading Milliman: “No New Hope” for Obamacare’s Risk Corridors →

On June 18, I testified to the House Committee on Oversight and Government Reform on Obamacare’s risk corridors. I was honored to join a panel alongside Edmund Haislmaier of the Heritage Foundation, which has just published his testimony. Mr. Haislmaier defined Obamacare’s three risk-mitigation provisions — reinsurance, risk adjustment, and risk corridors with unique clarity:

The first is what can be termed “market selection risk.” This risk arises when customers have a choice between two or more markets with different characteristics. In the case of the PPACA, the most obvious examples are decisions by employers about offering coverage. The PPACA now makes it possible for employers to discontinue group plans (without penalty in the case of firms with 50 or fewer workers) and instead send their employees to the exchanges to obtain new, subsidized coverage as individuals.

Thus, the PPACA’s reinsurance program can be seen as principally designed to address market selection risks by taxing the much larger employer group coverage market to provide additional subsidies to the individual market.

Continue reading Obamacare’s Risk Corridors Protect Profits, Not Patients →

Apparently, Jonathan Cohn of the New Republic was at the House of Representatives’ Oversight Committee hearing at which I was invited to testify on June 19. Cohn asserts that the hearing “backfired” because the Republican majority reported that health insurers would only claim about one billion dollars from ObamaCare’s risk corridors this year:

In the context of a program with outlays and tax credits of more than $2 trillion over the next ten years, that extra spending is simply not a big deal. (Remember, the risk corridor program expires in 2016.)

Get it? Because ObamaCare is such a huge blowout, a billion dollars is not much money. If ObamaCare cost $20 trillion, or $200 trillion, the estimated risk-corridor payouts would be even more “simply not a big deal”. So, the way to ensure that any individual component of a big-government program is “simply not a big deal” is to make the total as big as possible.

Continue reading If ObamaCare’s Risk Corridor “Bailout” Won’t Cost Much, Let’s Put That in the Law →