Whether or not you think it’s
fair to describe Obamacare’s risk corridor program as a bailout
probably depends in part on whether you expect it to cost taxpayers
money.
In theory, the program is designed to share risk symmetrically
between health insurers and the federal government: Insurers whose
costs are higher than expected will have a portion of their costs
covered by the federal government, but insurers with
lower-than-expected costs will pay into the system.
When the law was passed, the expectation was that the program
would be revenue neutral, with some insurers paying in, others
getting paid, and the whole thing more or less balancing out. But
with the rocky rollout of Obamacare’s exchanges, and suggestions
from health insurers that exchange-based plans might struggle
financially, it has increasingly seemed like a stretch to expect
that the program would raise as much money as it cost.
The Congressional Budget Office complicated matters further when
it estimated that, over the life of the program, which is currently
set to run through 2016, it would end up netting the government
about $8 billion in revenue. That estimate was based on the
experience with risk corridors in Medicare Part D, which
may not be the best guide to life under Obamacare.
That’s especially true now that we have an idea of how much the
administration expects the program to cost next year:
about $5.5 billion. That’s the amount President Obama’s new
budget plan requests to fund the risk corridor program during the
next fiscal year.
Caveats apply. This is for one year, not the life of the
program. And as the administration
likes to note, the budget is a “statement of our values as a
nation,” which is to say that it’s not the sort of thing that’s
likely to pass. But it is a signal about what the White House
expects, and believes, and stands for. Apparently, one of our
values as a nation is bailing out insurers participating in the
rollout of a botched health care overhaul.
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