Congress will likely cap an Obamacare program that some Republicans have labeled a "bailout" for insurance companies—and the industry says premiums will likely increase as a result.
The omnibus spending bill unveiled Tuesday night would limit the Affordable Care Act's "risk corridors" program, which is part of a three-tiered safety net for insurance companies that sell coverage in the law's exchanges.
Risk corridors caused a dust-up earlier this year between insurers and some Republicans, and the same disagreements are at play now. The insurance industry said the limits proposed in the latest spending bill are counterproductive, while Sen. Marco Rubio said he'll still push to repeal risk corridors altogether.
Risk corridors have been used in the past without much fuss, but Obamacare's risk corridors became controversial earlier this year when some Republicans, led by Rubio, criticized the program as a "bailout" for insurance companies and sought to repeal it.
The program works by collecting money from insurers whose Obamacare experience is better than they expected, and using that money to cushion the blow for insurers whose real-world experience is worse than they expected. Insurers set their premiums each year based on who they think will sign up and how many claims those new customers might file. If their customers ended up healthier than they expected, they pay into a pool. If their customers are sicker than they anticipated and their premiums were set too low, they can receive a payment from the same pool.
But the Obama administration had signaled that it would be willing to dip into other funding streams if necessary—if a lot of insurers had a bad experience in the exchanges and there wasn't enough money to pay them just using the funds collected from within the industry. That possibility gave rise to the accusations of a potential bailout for insurers.
The omnibus spending bill would block the administration from tapping other accounts to make risk-corridor payments. It says the Health and Human Services Department can't pull from its appropriations, or from Medicare funding, to beef up Obamacare's risk corridors.
That wouldn't stop the administration from administering the risk corridors program, but it means HHS can't spend any more than it takes in—limiting the payments it can make if insurers' experience with the exchanges is especially bad.
Those changes will cause insurance premiums to rise, the insurance industry said.
"American budgets are already strained by health care costs, and this change will lead to higher premiums for consumers and make it more difficult to achieve affordability," said Clare Krusing, communications director at America's Health Insurance Plans. Our focus should be on changes to the law that will lower costs—like repealing the health insurance tax—not those that drive premiums higher."
The insurance industry has strongly opposed efforts to repeal risk corridors, which gained rhetorical steam early this year but never came up for a vote.
Rubio, however—who introduced the leading repeal bill—said he'll keep trying.
The Florida senator's office praised the restrictions in the omnibus spending bill but said he will still push a full repeal of the risk corridors program because the restrictions in the spending bill are only temporary.
"The provisions addressing Obamacare and protecting against a taxpayer-funded bailout of insurance companies are crucial for taxpayers, and consistent with what Senator Rubio was fighting for," Rubio spokesman Alex Conant said in a statement. "While there is much in this massive spending measure that is deeply troubling, at least this provision appears to be a step in the right direction."
This article is from the archive of our partner National Journal.