1. Because of the PPACA, insurers can no longer deny people coverage or charge them higher premiums because of pre-existing conditions. This provision on its own could cause problems for the insurance industry; health insurers might compete to avoid sicker consumers or become uncertain about how to price coverage. The risk corridors are included in the PPACA to help stabilize the market and promote insurer competition based on quality and value.
2. The risk corridors program limits health plans’ losses and gains beyond a specified range to stabilize premiums and prevent inaccurate premium setting during the early years of the PPACA exchanges. HHS collects funds from health plans with lower-than-expected claims and makes payments to those with higher-than-expected claims. This applies only to qualified health plans offered through the exchanges and is in effect from 2014 to 2016.
3. In a final rule setting health insurance exchange and insurance market standards for 2015 and beyond, CMS adjusted the risk corridor program for health insurers — raising the ceiling on allowable administrative costs and the floor on profits by 2 percent — to let payers account for pricing uncertainties, among other policy changes.
4. In a report released in February, the Congressional Budget Office projected that through 2024, the federal government will pay health insurers a total of $8 billion through the risk corridors program and collect $16 billion, yielding $8 billion in savings.
5. Republican lawmakers have called for the repeal of the risk corridors, calling them a “taxpayer bailout” of insurance companies. Rep. Jim Jordan (R-Ohio), chairman of the Economic Growth, Job Creation and Regulatory Affairs subcommittee of the House Committee on Oversight, has disputed the CBO’s assessment of the program, according to a report from The Hill. The committee conducted research involving 15 traditional insurers and 23 PPACA co-op insurers, and the companies report that they expect getting nearly $730 million from the risk corridors. Overall, Mr. Jordan said the cost of the program could exceed $1 billion. Democratic lawmakers have dismissed his statement as false criticism of the PPACA, according to the report.
More Articles on the PPACA:
Health Insurance Premiums Under the PPACA: 5 Things to Know
Insurers Plan Premium Increases for PPACA Plan Enrollees
5 Things to Know About New Health Insurance Enrollees
