Analyst shrugs off exchange bumps

But Marinucci said he has seen similar risk corridor, reinsurance and risk adjustment programs work well for carrier in the Medicare Advantage and Part D programs.

Carriers will pay flat amounts for each enrollee served for the temporary reinsurance and permanent risk-adjustment programs. Those programs are supposed to help compensate individual and small-group carriers that cover patients with unusually large claims.

To fund the temporary risk corridor program – which is supposed to compensate carriers that get unusually high profit margins during the first three years the exchange is in place – carriers with very high profits are supposed to pay into a fund that will give cash to carriers with unusually big losses.

One risk is that, if most exchange carriers lose a large amount of money in 2014, the government could face a tough political decision about whether and how to come up with the money to meet the risk corridor program payment obligations, Marinucci said.

But “there was an expectation that there was going to be some rockiness” as the exchanges started, Marinucci said.

The insurers selling QHPs through the exchanges have chosen to participate, and most are going in with very high levels of capitalization, Marinucci said.

See also:

• No one’s talking about exchange backup plans
• Moody’s pans PPACA timeline changes
• PPACA uncertainty concerns carriers most