Federal regulators have released a set of “adjustment percentages” that could determine how easily struggling health insurers can get help from a major Patient Protection and Affordable Care Act (PPACA) insurer buffer program.
But the agency that put out the numbers, the Center for Consumer Information & Insurance Oversight (CCIIO), has not given any information about how much cash the program might actually have available to help health insurers.
See also: What’s under that PPACA World rug?
The risk corridors program is supposed to use cash from plans with high underwriting profit margins for the 2014, 2015 and 2016 plan years to help the insurers that had bad results.
The new list means that a health insurer in Arkansas, the state with the highest adjustment percentage, may be able to earn an underwriting profit margin as high as 14.35 percent for 2014 and still ask cash from the risk corridors program, if the program has any cash. In North Carolina, the cut-off will be 12.85 percent.
Health insurers in 15 other states may be able to ask for risk corridors program help if they have 2014 profit margins under 9 percent.
Health insurers in 11 states and the District of Columbia will be able to put in a risk corridors claim only if they have profit margins under 3 percent.
In the remaining 23 states, the risk corridors program access cut-offs will range from 5.81 percent to 8.98 percent.
At this point, however, a new federal law forbids CCIIO from using taxpayer money to supplement insurer contributions to the risk corridors program fund, and it’s not clear how many health insurers earned enough in 2014 to have to pay cash into the fund.
CCIIO is an arm of the Centers for Medicare & Medicaid Services (CMS), which is, in turn, a division of the U.S. Department of Health and Human Services (HHS). CCIIO runs the HHS PPACA programs that affect the commercial health insurance market.
Originally, HHS was going to require most non-PPACA commercial health insurance coverage to expire before the end of 2013, then require the enrollees to shift into PPACA-compliant plans.
Republicans argued that the mandatory shift violated the spirit of President Obama’s promise to Americans’ that, “If you like your coverage, you can keep it.”
A PPACA “grandfather” provision lets coverage that was in place before March 23, 2010, stay in effect after Jan. 1, 2014, without complying with most PPACA rules.
In November 2013, CMS announced that it would build on the “grandfathering” provision by letting states and insurers give consumers permission to keep pre-PPACA coverage issued after March 23, 2010, in place. Some commentators have called that effort to extend the life of pre-PPACA coverage “grandmothering.”
Insurers argued that the change would skew claims risk. HHS responded by saying it would compensate insurers for the effects of the change by making the terms of the risk corridors program more attractive.
The risk corridors program is one of the three big PPACA programs, sometimes called “the three R’s programs,” that are supposed to help shield health insurers from the effects of tough new PPACA underwriting and pricing restrictions on health insurers’ finances.
The other programs are a reinsurance program, which will use revenue from a fee on most health plan enrollees to help insurers pay the bills for enrollees with catastrophic claims incurred in 2014, 2015 and 2016, and a permanent risk-adjustment program, which is supposed to use cash from plans with low-risk enrollees to help plans with high-risk enrollees.