Carriers have almost no way to know how the new federal “risk corridor” will really affect them this year.
Hans Leida and Doug Norris, Milliman actuarial consultants, write about how unpredictable the program is in a new commentary.
Congress created the program to keep the new Patient Protection and Affordable Care Act health underwriting restrictions from killing off carriers.
Some PPACA critics have called the risk corridor program a bail-out for health insurers.
But, in the real world, the idea that the risk corridor program will make big payments to insurers that do poorly is not necessarily correct, Leida and Norris write.
PPACA has eliminated insurers’ ability to reject sick applicants for individual health coverage or charge those people higher rates.
To compensate, PPACA calls for the risk corridor program to pay cash to some insurers in the individual market.