here is one example:
Risk corridors were a three-year program designed to keep the individual markets stable during the early years of ACA compliance. The idea was to take money from insurers that ended up with lower-than-expected claims, and send it to insurers that ended up with higher-than-expected claims.
And if insurers with higher-than-expected claims needed to be reimbursed more than the amount contributed by insurers with lower-than-expected claims, HHS was going to make up the difference. This was clarified in the 2014 Benefit and Payment Parameters, finalized in 2013. On the flip side, if insurers had done exceedingly well, HHS would have been able to keep the excess funding. Obviously that didn’t happen.
Then in late 2014, Republican lawmakers, led by Senator Marco Rubio, added language to a must-pass budget bill (Cromnibus) that retroactively made the risk corridors program budget neutral. This was after 2014 coverage had been provided for nearly the full year, and after 2015 open enrollment was already underway, with rates long-since locked-in.
Claims were indeed higher than expected in 2014. When the dust settled, carriers with higher-than-expected claims were owed a total of $2.87 billion, while carriers with lower-than-expected claims only contributed $362 million to the program. HHS took that money – which they could no longer supplement with federal funding due to the December 2014 Comnibus Bill – and spread it around to all the insurers that were owed money, but they were only able to pay them 12.6 percent of what was owed.
The 2015 risk corridor results were similarly bleak.
Large insurers were mostly able to weather this setback. But smaller insurers, and particularly the start-up CO-OPs, were not.
Source:
10 ways the GOP sabotaged Obamacare | healthinsurance.org
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