The big rating agencies should now classify the United States as a country that makes selective defaults on its obligations.
That’s what the country is really doing with the Patient Protection and Affordable Care Act of 2010 (PPACA) risk corridors program.
The drafters of PPACA included the program in PPACA as a mechanism for protecting insurers against unexpected problems with PPACA exchange claim risk during the first three years of exchange operations. The program is supposed to use money from insurers with good underwriting results to protect insurers with bad underwriting results.
Details are scarce, but it looks as if insurers might ask for a few billion dollars from the risk corridors program, and as if the insurers with good results might pay in only about 10 percent of the amount needed to satisfy the insurers “with receivables.”
Opponents of PPACA have called the program a “bailout for insurers,” and, in December 2014, they succeeded at putting a ban on use of taxpayer money to fund the program in a spending measure that President Obama signed into law.
The ban on use of federal money to fund the program does not include any grandfathering provision for insurers that were depending on the risk corridors program to exist when they set their 2014.
In other words: PPACA opponents succeeded at taking away a program that insurers were counting on to make the numbers for 2014 work about 18 months after the 2014 coverage was priced, and after 2014 was pretty much over.