By Ferdous Al-Faruque - 06/18/14 01:20 PM EDT
An ObamaCare revenue-sharing program amounts to a taxpayer bailout of insurance companies, the chairman of a House Oversight subcommittee said Wednesday, adding the bill could run more than $1 billion just in 2014.
Rep. Jim Jordan (R-Ohio), chairman of the Economic Growth, Job Creation and Regulatory Affairs panel, disputed a previous Congressional Budget Office (CBO) report that the risk corridors would cost the government nothing.
The Temporary Risk Corridors Program was set up under the Affordable Care Act (ACA) to distribute funds from insurers with healthier, less expensive consumers to those with sicker, more costly enrollees.
The program is intended to spread the cost of risk in the early stages of the new healthcare law.
Based on the committee’s own research of 15 traditional insurers and 23 ObamaCare co-op insurers, Jordan said companies expect to get nearly $730 million from the corridor.
“The information provided by the insurers suggests that the total taxpayer bailout could well exceed $1 billion this year alone,” he said.
Democrats on the panel disagreed with Jordan’s characterization and said it was only the latest attempt to falsely criticize the ACA.
“Republicans continue to inaccurately describe these risk-mitigation mechanisms as a bailout to health insurance companies,” said Rep. Matt Cartwright (D-Pa.), ranking member on the subcommittee. “This characterization is just plain wrong.”
Cartwright notes the funds to pay for the risk corridor are only pulled from insurers who participate in the federal and state healthcare exchanges, and are distributed based on risk taken on by individual insurers.
“The reinsurance pool amount is set by statute, and payments may not exceed the amounts collected from insurers,” he said. “In April, the nonpartisan Congressional Budget Office confirmed that the risk corridor program would be budget neutral over the three-year life of the program. None of these facts sound like a bailout to me.”
Senate Budget Committee Chairman Jeff Sessions (R-Ala.) told the panel Wednesday that the Obama administration’s plan to pay for the corridor through the Centers for Medicare and Medicaid Services is unlawful.
Sessions and Rep. Fred Upton (R-Mich), chairman of the House Energy and Commerce Committee, recently wrote a letter to Health and Human Services Secretary Sylvia Burwell raising the same concern.
Sessions argued that while the law allows the administration to collect money for the risk corridors, it does not stipulate who has authority to redistribute the funds.