A law professor told members of Congress this week that the new Patient Protection and Affordable Care Act risk corridor program could end up turning a profit for the federal government.
Timothy Stoltzfus Jost, a Washington and Lee University faculty member who supports PPACA, appeared Wednesday at a hearing organized by the House Oversight and Government Reform Committee to defend the temporary risk corridor program and the other PPACA “3 R’s” programs — the temporary PPACA reinsurance program and a permanent PPACA risk adjustment program.
The risk corridor program would take money from all individual and small-group plans, on and off the public exchanges, with claims at least 3 percent lower than the projected amounts and pay the money to plans with total claims at least 3 percent higher than the projected amounts. PPACA requires the federal government to make up for any funding shortfalls in that program for three years.
Jost said a similar risk corridor program has been protecting insurers in the Medicare Part D prescription drug market since 2006.
That program “has turned out to be a net money-maker for the federal government,” Jost said, according to a written version of his testimony.
Even if the PPACA risk corridor were to lose money, that would be partly because of Republican efforts to hold down exchange plan enrollment, and going back on PPACA funding promises could be an unconstitutional failure to meet its commitment to private insurers, Jost said.
John Goodman, president of the National Center for Policy Analysis, argued that the PPACA risk corridor program is different from the Part D risk corridor program, because PPACA encourages insurers to dump the most costly enrollees into the plans covered by the new PPACA exchange plans.
The Part D program did not encourage existing prescription drug plans to dump enrollees into Part D plans, Goodman said.
Enrollment problems and problems with attracting healthy young enrollees could also hurt exchange plan results and increase federal government PPACA risk corridor program payments, Goodman said.
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