Posted by Curt on 7 October, 2015 at 6:36 pm. 8 comments already!


Kristina Ribali:

Reneging on previous promises and guarantees, the federal government has decided to short insurance companies out of billions of dollars agreed to under Obamacare.

The Washington Examiner reports that, “Insurers learned late Thursday that they’ll receive just $362 million out of the $2.9 billion” they had requested from Obamacare in 2014. Why? Because Obamacare “hasn’t brought in nearly as much money as it needs to pay out.”

Unfortunately for insurance companies, they have enrolled higher numbers of older and sicker customers than anticipated. The Obama Administration promised the insurers federal funds “to help cover their costs, through a program known as risk corridors.”

Here’s how the program was supposed to work:

If a health plan found itself with at least 3 percent more medical claims than it had anticipated, the government would reimburse it for half of those losses. If claims surpassed expectations by more than 8 percent, the government would pay 80 percent of the losses.

However, “the law requires the program to be budget-neutral, meaning that if there aren’t adequate funds, insurers have to go without.” There’s the fine print that is the crux of the problem.

The response from the insurance industry  (hoping to see a boon to their bottom line under Obamacare) was harsh and swift.

“Stable, affordable coverage for consumers depends on adequate funding of the risk corridor program,” said Marilyn Tavenner, CEO of America’s Health Insurance Plans. “It’s essential that Congress and CMS act to ensure the program works as designed and consumers are protected.”

Notice the line, “stable, affordable coverage for consumers.” Many Obamacare enrollees would say that coverage has been anything but stable and affordable so far. Rates for plans offered through Obamacare are continuing to climb, and that doesn’t seem likely to change. With the loss of these expected funds to help prop up the bottom line of these insurers, further price increases in Obamacare plans are certain.

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