Mandy Cohen (House Oversight photo)

House Republicans roasted health insurers along with Obama administration officials today at a hearing on three new federal health insurance risk-management programs.

The House Oversight regulatory affairs subcommittee organized the hearing — “Poised to Profit: How ObamaCare Helps Insurance Companies Even If It Fails Patients” — to look at the “three R’s” programs:

  • A temporary, insurer-paid reinsurance program that’s supposed to protect insurers against enrollees with high claims.
  • A temporary risk corridors program that’s supposed to use insurer money and, possibly, government money to protect insurers with poor underwriting results.
  • A permanent risk-adjustment program that’s supposed to use money from insurers to low-risk enrollees to provide subsidies for insurers with high-risk enrollees.

Mandy Cohen — who recently took over as the acting director of the Center for Consumer Information and Insurance Oversight (CCIIO), the U.S. Department of Health and Human Services (HHS) agency in charge of setting up and running PPACA commercial health insurance programs — said the risk programs seem to be achieving the goals of holding down exchange plan prices and keeping insurers interested in the individual and small-group health insurance markets.

For 2015, “what we’re very happy to see is proposed rate increases that are in the single digits,” Cohen said.

Regulators also have seen indications that more insurers are planning to sell coverage through the PPACA public exchange system in 2015, Cohen said.

Republicans on the subcommittee said the three R’s will likely be a large, growing pool of government bailout money for the health insurers. 

Rep. Jim Jordan, R-Ohio, said the Congressional Budget Office originally estimated one of the three R’s, the risk corridors program, would provide an $8 billion profit for the U.S. Treasury, then, two months later, estimated the program would just break even.

A witness at the hearing, Seth Chandler, a University Houston law professor, has estimated that the program may end up using a large amount of money. He is estimating that the “transitional relief” changes HHS has made in PPACA programs could lead to $1.1 billion in extra risk corridors programs costs if the transitional changes end after one year, and $2.7 billion in extra costs if the changes last for three years.

Jordan asked another witness, Cori Uccello — a senior health fellow at the American Academy of Actuaries — about the increasingly gloomy predictions about risk corridors program performance.

Uccello declined to come to any conclusions about how the risk corridors program and the other risk programs will perform.

“It’s too early to say,” Uccello said. “There’s so much uncertainty.”