The health care follies continue on Capitol Hill, and the
latest irony has little to do with the Uninsurance Guarantee Act (aka the
American Health Care Act, TrumpCare, RyanCare). This one has to do with the
only successful attempt by the Republican legislators to obstruct the
Affordable Care Act (ACA), which may well come back and bite them.
The risk-adjustment payments included in the ACA were based
on the assumption that, initially, health plans participating in the exchanges
would be exposed financially with a surge of enrollment from Americans with
chronic illnesses. Until the individual mandate (and its significant penalties)
kicked in, the authors of the ACA understood that the healthy would need
encouragement to join an exchange plan and stabilize the market. These payments
were supposed to be made to insurers over the first 3 years of implementation
of the ACA.
However, the Republican Party, led by Senator Marco Rubio and
House Speaker John Boehner, pushed for a measure
in the federal budget in 2014 that was largely successful in stunting the
individual market that was being cultivated by ObamaCare. This budgetary
provision required the risk-corridor payments to not have a negative effect on
total spending. In other words, the Centers for Medicare and Medicaid Services (CMS)
could not pay out more than it took in. The result: in 2015, CMS released just under
13% of the risk-corridor payments it owed to insurers. This undercut the
ability of several health plan cooperatives to survive, as well as played a
role in driving up premiums on the exchanges. When the federal government could
not make the retroactive and newly owed payments in 2016, even healthy insurers
started exiting the market, feeling the effects on their bottom lines. An
analysis by Modern
Healthcare found, for instance, that Blue Cross Blue Shield of Texas was
owed $917 million for losses incurred in 2014 and 2015. Health Republic
Insurance of New York, a start-up co-operative that ceased operation in 2015, was
owed $463 million. Ten insurers were owed at least $173 million apiece for 2014
and 2015.
In 2017, these insurers want to get paid. In total, they are
owed $8.3 billion in risk-corridor payments for the first 2 years of exchange
operations. In February, a federal judge ruled that the government owed Moda
Health $214 million in risk- corridor payments. That conflicted with the
ruling of another judge, who said that CMS never guaranteed these payments. Blues
plans from Tennessee, Alabama, Idaho, and North Carolina, have sued, as well as
Highmark Inc, and the defunct co-ops Health Republic of Oregon and Land of
Lincoln Mutual Health.
The irony, of course, is that it is no longer the Obama
Administration that is responsible for this litigation. The Republicans are now
in charge, and may have to decide how to settle or pay out these claims. Eight billion
dollars is not a huge by federal government standards, but it would be a bitter
pill for the GOP to swallow.
