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Republicans offer two ACA risk corridors paths

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One team of Republican senators has proposed a new attack on a major Affordable Care Act risk corridors program.

Another team of Republican senators has proposed a limited patch for the health insurer buffer program.

It’s possible that both proposals could work together, but neither would help health insurers collect on the billions of dollars the ACA risk corridors program owes them for 2014, 2015 and 2016.

Related: 20 biggest new ACA risk corridors failure absorbers

Sen. Marco Rubio of Florida has introduced S. 147, the Obamacare Taxpayer Bailout Prevention Act, a bill that would prohibit the U.S. Department of Health and Human Services from making any ACA risk corridors program payments.

Rubio’s bill has four Republican cosponsors: Jeff Flake of Arizona, John McCain of Arizona, Mike Lee of Utah and Tom Cotton of Arkansas.

Sen. Bill Cassidy of Louisiana has introduced a second bill with a risk corridors program provision: S. 191, the Patient Freedom Act of 2017 bill.

S. 191 would create an optional grant program for states, using the cash that otherwise would be spent on each state’s Affordable Care Act coverage expansion programs.

A state that chose to get the S. 191 grant money, rather than let the existing ACA programs stay in place, could use some federal money to operate an exchange with a risk-adjustment program, to help compensate the insurers that ended up with more than their fair share of health risk.

A state also could set up a risk corridors program for the individual and small-group market. Under the bill, the state could not use federal funds to pay for its risk corridors program.

But, if a state were getting federal health grants for other purposes, maybe it could then use its own cash to support the risk corridors program.

Related: Humana to write off $591 million in ACA risk corridor money

Like Rubio’s bill, Cassidy’s bill has four Republican cosponsors. The S. 191 cosponsors are Susan Collins of Maine, Shelley Moore Capito of West Virginia, Johnny Isakson of Georgia and Lindsey Graham of South Carolina.

Risk corridors program managers had trouble collecting enough cash from thriving issuers to make the payments the program owed the struggling issuers. (Image: iStock)

Risk corridors program managers had trouble collecting enough cash from thriving issuers to make the payments the program owed the struggling issuers. (Image: iStock)

Risk corridors program, explained

The Affordable Care Act risk corridors program exists because the creators of the ACA wanted to get rid of most of the defenses health insurers once used to hold claim risk down, but the ACA creators also wanted the insurers to keep health coverage prices down.

The ACA blocked insurers from thinking about applicants’ health problems when deciding whether to sell them coverage.

The ACA also required insurers to provided unlimited benefits for “essential health benefits,” such as inpatient hospital care.

To give insurers the confidence to keep prices low, in spite of all of the new rules, the risk corridors program was supposed to use cash from exchange plan issuers that did well in 2014, 2015 and 2016 to help issuers that did poorly in those years.

Insurers originally thought the U.S. Department of Health and Human Services could find cash to make up for risk corridors program losses if HHS had a hard time collecting enough cash from thriving issuers to help the struggling issuers.

Marco Rubio and other Republicans said the risk corridors program was a bailout for health insurers. Rubio succeeded at getting restrictions on program spending into must-pass budget measures for 2015 and 2016. The restriction provisions prohibit HHS from using any source of funding other than cash from thriving issuers to make risk corridors program payments.

HHS says it owes the insurers a total of about $8 billion for 2014 and 2015. It has not yet calculated what it owes insurers for 2016.

Risk corridors program managers have collected enough cash to pay only 15 percent of the 2014 program obligations. Managers have not made any payments for 2015.

Related: ACA risk corridors gap rocks more carriers

One federal judge has said that insurers should be able get the payments from the federal Judgment Fund. Another federal judge ruled that insurers had no contractual relationship with the risk corridors program and cannot collect the payments. 


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