ObamaCare program paying insurers far less than requested

Insurers will receive only 12.6 percent of the funds they requested under an ObamaCare program meant to cushion them from heavy losses, the administration announced Thursday. 


The program in question is called “risk corridors” and is intended to protect insurers on the law’s marketplaces from heavy losses or having to spike premiums due to uncertainty as the law gets under way. The program takes money from insurers faring better financially on the exchanges and gives it to insurers faring worse. 

The federal Centers for Medicare and Medicaid Services (CMS) announced Thursday that insurers requested $2.87 billion under the program for 2014 but will receive only $362 million, or 12.6 percent. 

The ObamaCare risk corridor program, which is modeled off a program in the 2003 prescription drug law, has been politically controversial, with Republicans denouncing it as a government “bailout” for insurers. 

A senior CMS official said that the low payment rate could cause “isolated solvency and liquidity challenges” for a small number insurers, but did not go into much more detail on what the administration expects. 

The administration says it will work with states and insurers to work to address any issues. 

The announcement comes after it was delayed in August because of problems with the data it received from insurers. 

The administration pointed out that the this is the first year of the three-year risk corridor program, so the overall loss or gain will not be known until the end. 

It also raised the prospect of going to Congress for more funds if they are needed at the end of 2016, though the prospects of lawmakers agreeing to the request are doubtful. 

Marilyn Tavenner, president of the insurer group America's Health Insurance Plans and the former head of CMS, called for action to address the funding issue. "Stable, affordable coverage for consumers depends on adequate funding of the risk corridors program," she said in a statement. "It's essential that Congress and CMS act to ensure the program works as designed and consumers are protected."