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Life Health > Health Insurance

PPACA and the 2016 budget proposal

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The Patient Protection and Affordable Care Act (PPACA) premium tax credit could generate about $24 billion in budget obligations at the U.S. Treasury Department this year.

The total will be up from 11 billion in 2014, and it could increase to $39 billion in 2016.

The premium tax credit program helps people with incomes from 100 percent to 400 percent of the federal poverty level pay for qualified health plan (QHP) coverage from the PPACA exchange system.

The budget obligation for a related program, the PPACA cost-sharing reduction program, which helps cut spending on exchange QHP insurance deductibles and other out-of-pocket health care costs for people with incomes from 100 percent to 250 percent of the federal poverty level, could be about $5 billion this year. That figure would be up from $2.1 billion in 2014. Obligations for that program could rise to $6.2 billion next year. 

Obama administration officials have given those figures in a detailed description of the Treasury Department’s latest budget estimates. The administration included that description, and a similar description of the latest budget estimates at the U.S. Department of Health and Human Services (HHS), in an appendix to the Obama administration’s fiscal year 2016 budget proposal.

The government’s 2016 fiscal year will start Oct. 1.

The Obama administration has put information about the PPACA “three R’s” risk-management programs in the HHS budget proposal appendix.

The three R’s programs include:

  • A temporary reinsurance program that uses cash from a wide range of plans to help insurers with high-cost individual coverage enrollees.

  • A temporary risk corridors program that uses cash from exchange plan issuers with good underwriting results to help issuers with weak underwriting results.

  • A permanent risk-adjustment program that’s supposed to shift cash from plans with enrollees with low claim risk scores to plans with enrollees with high risk scores.

The reinsurance program is supposed to collect $10 billion in reinsurance receipts this year and $6 billion next year. The program could pay out about $9.3 billion this year, carry $731 million over into 2016, and pay $6.8 billion in 2016.

The risk corridors program could lead to about $5.5 billion in reimbursable obligations in 2015, and about $6.4 billion in obligations in 2016, according to the budget document.

The risk adjustment program could have $19 million in administrative expenses this year and $21 million in administrative expenses next year. Program managers could use that money to administer $3.7 billion in program receipts and $5.6 billion in receipts next year. The program would pay $269 million of the money received in 2015 the following year.

The HHS budget appendix also covers matters such as proposed spending on the PPACA exchange system and the Consumer Operated and Oriented Plan (CO-OP) program.

See also: Budget proposal phases out some PPACA funding

Total public exchange construction obligations will fall to $496 million this year, from $784 million in 2014. The total for new exchange construction obligations should fall to $52 million next year, according to the budget document.

Similarly, CO-OP obligations are supposed to fall to $96 million this year, from $399 million in 2014, and fall again, to $8 million, next year.

HHS says it has $337 million in direct CO-OP loans outstanding. It is not yet showing any write-offs for defaults on CO-OP loans.

See also: Regulators to liquidate Iowa PPACA plan


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