ObamaCare risk fund nearly depleted, S&P warns

ObamaCare risk fund nearly depleted, S&P warns
© Greg Nash

A key ObamaCare program intended to cushion health insurers from high costs is facing a massive cash shortage going into 2016, Standard and Poor’s said Thursday.

Under the so-called “risk corridor” program, the Obama administration charges insurers with more-than-expected profits and redistributes the money to plans with losses.

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In the first two years of the healthcare law, more insurers than expected have ended up with balance sheets in the red. As a result, the risk pool now has only about $1 to cover every $10 in claims – an equation that is not likely to improve until the market stabilizes.

“We estimate that that the 2015 ACA risk corridor will be significantly underfunded, as was the case the previous year,” Standard and Poor’s analyst Deep Banerjee predicted in a report Thursday.

Banerjee said external funding would likely be needed to add to the funds in 2016, a move that would likely have to be made by Congress.

Federal health officials had expected a rough few years after new rules that said insurers couldn’t reject customers with pre-existing conditions – adding more risk to the marketplace.

But the risk pool has been depleted faster than expected as insurers intentionally lowered costs in the early days of the ObamaCare maketable with hopes of reeling in new customers.

The situation could improve this year, with more insurers raising their premiums, Banerjee said.

A more certain way to bolster the fund is to use leftover cash from another ObamaCare program intended to spread risk around insurers — the reinsurance program.

The reinsurance risk fund, which compensates plans for high-cost enrollees, had $800 million left at the end of 2014

The Obama administration has not yet said how — or if — it will bolster the risk fund.

“In our view, it looks like appropriations may be the only way to fully fund the risk corridor deficits,” the analysis warned.