Insurers might get bigger payments

Health insurance companies could see higher government payments because of President Obama's administrative move to address the criticism over canceled health plans.

ADVERTISEMENT
White House spokesman Jay Carney suggested Friday that federal health officials would raise payments to insurance companies should the policy shift bring on unexpected costs.

"If the costs are higher, then [the Department of Health and Human Services] can mitigate those costs with insurers," Carney said at a briefing.

"If costs come in significantly lower, then the insurers will replenish the fund by passing back some of those profits."

The remark came after health insurers strongly criticized Obama's policy, which threatens the already uneasy alliance between the industry and the White House.

Higher reimbursements under ObamaCare could quiet insurers' concerns about the announcement, which shifts blame to the insurance industry for policies voided under the health law. 

Carney was addressing part of ObamaCare that entitles insurers to additional funding if more expensive patients sign up for their products than anticipated.

The payments, which fall under the law's "risk corridor" provision, are intended to protect the industry from any unforeseen financial strain associated with covering new, sick patients.

Insurance companies will have to pay the government if their costs are less than projected, providing money for officials to reimburse other insurers.

The fear with Obama's policy is that more young, healthy people will retain their old policies and not move into ObamaCare's new insurance marketplaces, which need a balance of sick and healthy patients in order to function properly.

Weak marketplace enrollments from the healthy could ultimately destabilize the system and raise premiums, a possibility insurers raised after the announcement Thursday.

"Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace," said America's Health Insurance Plans President Karen Ignagni in a statement.

"If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers."

Ignagni insisted that the administration work to avoid this outcome, indirectly arguing for higher payments to the industry.

"Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers," she said.

It is unclear whether adjusting the risk corridors would affect the law's overall cost.

Sen. Marco Rubio (R-Fla.) is reportedly offering legislation that would repeal the provision altogether, arguing it raises the possibility of an insurance industry "bailout."