Amy Goldstein at the Washington Post is out with a story reporting that the Obama administration is looking to use an obscure federal law to pay billions of dollars in Obamacare risk corridor liabilities to participating insurance companies.
You might recall that the administration was only able to pay 12.5% of what insurers were owed for 2014 under the reinsurance program designed to protect health plans from losses in the insurance exchanges. It has been assumed that payments for 2015 losses would fare no better.
The fundamental problem was that carriers who lost money did so at a rate eight times greater than the level of carriers who made money in 2014––there just wasn’t enough money coming from profitable carriers to pay the carriers losing money all that they were owed under the reinsurance scheme. When the administration said they would try to make up any deficit from other funds, Republicans put a provision in a budget bill that prohibited that.
Because these payments were not made, most insurance companies took a major hit to their bottom lines. The hit was so bad that many of the new Obamacare co-ops collapsed at least in part because of the incomplete payments.
Read the full article here.