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Feds post PPACA reinsurance program data

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A big Patient Protection and Affordable Care Act (PPACA) insurer support program may fall far short of its 2014 revenue target.

PPACA calls for the program, the PPACA reinsurance program, to collect $12 billion in issuer payments for 2014.

Officials at the Center for Consumer Information & Insurance Oversight (CCIIO) say in a memo that the reinsurance program has received just $8.7 billion in payments, or 28 percent less than the amount set by the statute.

Coverage issuers have scheduled another $1 billion in payments to come in by the end of the year.

If the program ends 2015 with $9.7 billion in issuer payments, the program would have 19 percent less funding than expected.

The final total could be less than $9.7 billion, because some issuers have had trouble with counting covered lives, and, in some cases, issuers may still be able to ask for refunds, CCIIO officials say.

This is one of the first times CCIIO has posted data on actual PPACA program revenue.

See also: GAO: We can’t verify most CCIIO financial reports

CCIIO is an arm of the Centers for Medicare & Medicaid Services (CMS), which is, in turn, part of the U.S. Department of Health and Human Services (HHS). HHS created CCIIO to handle the PPACA provisions and programs that affect the commercial health insurance market.

The drafters of PPACA tried to help insurers cope with effects of new PPACA underwriting restrictions, and encourage them to keep prices low, by creating the “three R’s”: a three-year risk corridors program that’s supposed to use cash from successful carriers to help carriers with poor underwriting results; a permanent risk-adjustment program that’s supposed to use cash from carriers with low-risk enrollees to help carriers with high-risk enrollees; and a three-year reinsurance program that’s supposed to use cash from most health coverage providers to help PPACA-compliant plans handle the bills for patients with catastrophic claims.

Affected coverage issuers were supposed to fund the reinsurance program for the 2014 coverage year by paying a total of $63 per life covered in 2014. The affected coverage issuers were supposed to send CMS the 2014 enrollment counts they would use to make the payments by Dec. 5, 2014.

The issuers could choose between sending CMS $63 per 2014 covered life by Jan. 15, 2015, or by sending CMS $52.50 per life by Jan. 15, 2015, and another $10.50 per life by Nov. 15, 2015.

See also: Collins: Where’s the PPACA group plan enrollment data?

HHS was planning to use just $10 billion of the reinsurance revenue to pay reinsurance claims. It was hoping to send $2 billion in excess revenue to the U.S. Treasury Department, to help the federal government pay its bills.

If the reinsurance program collects less than $10 billion, ”the first $10 billion in contributions collected will be allocated wholly for reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans,” officials say.

State officials have noted that reinsurance claims may be lower than expected for 2014, because only fully PPACA-compliant plans can participate in the reinsurance program, and many consumers were still in old-rule plans in 2014.


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