Health Care
3:44 pm
Wed February 5, 2014

Obamacare Opponents Open New Front For Debate In 'Risk Corridors'

Originally published on Wed February 5, 2014 9:23 pm

Transcript

MELISSA BLOCK, HOST:

Here's another way congressional Democrats are using the Budget Office report in support of the Affordable Care Act. They're defending an obscure provision in the law that serves to backstop insurance companies participating in the health plan exchanges. And in a flip of party stereotypes, this has Democrats standing up for the insurance companies and Republicans clashing with big business.

NPR's David Welna explains.

DAVID WELNA, BYLINE: Today at its 24th hearing on the Affordable Care Act, the GOP-controlled House Oversight Committee had Marco Rubio, the Republican junior senator from Florida, as its lead witness. He was there as sponsor of a bill that would eliminate a part of the healthcare law known as risk corridors. That's a policy meant to encourage health insurers to risk taking part in the federal insurance exchanges. If those companies end up having to pay more in medical bills than what they've collected in premiums, the federal government would make up most of the difference.

Rubio told the panel health insurance companies jumped at the chance to sell more policies.

SENATOR MARCO RUBIO: But what they're now finding out is that the pool of enrollees that is signing up is smaller, older, and unfortunately sicker, than what they have priced for. And soon, they will be coming to Washington for their bailout to cover their losses as a result.

WELNA: But Rubio's prediction of a bailout for insurers stood squarely at odds with what CBO Director Doug Elmendorf had to say about the risk corridors program, when he presented his latest report yesterday.

DOUG ELMENDORF: We conclude that it was most likely that the risk corridor program, in the Affordable Care Act, would actually save the federal government money by an amount that we estimate to be $8 billion over the next several years.

WELNA: That's because just as the federal government could be on the hook if insurance companies charge too little for new policies, it could also reap a share in the profits if the insurers take in more than they pay out.

The risk corridors idea is not new. In fact, it was approved by big Republican majorities in Congress as part of the drug coverage expansion under President Bush known as Medicare Part D. The oversight panel's top Democrat, Elijah Cummings, said that insurance backstop turned out very well for the federal government.

REPRESENTATIVE ELIJAH CUMMINGS: Rather than a bailout for insurance companies, the program has resulted in $7 billion in net gains to taxpayers. But now, since these same mechanisms are part of the Affordable Care Act, Republicans argue that they are a bailout for insurance companies.

WELNA: Republicans were for it, Cummings added, before they were against it. The healthcare act's risk corridor program, he said, would also save taxpayers money.

CUMMINGS: And if we were to adopt legislations to eliminate this program, billions of dollars in savings would simply disappear.

WELNA: A former healthcare advisor in the Bush White House, Doug Baxter, threw cold water on the CBO's estimates.

DOUG BAXTER: The CBO, as we all know, is often wrong and its new estimate is accompanied by a number of caveats. There's simply too much uncertainty surrounding the law's implementation for Congress to rely exclusively on this latest CBO estimate which is subject to change without notice.

WELNA: But another witness pointed to a letter from the U.S. Chamber of Commerce urging Congress not to repeal the risk corridors. Timothy Jost is a healthcare expert at Washington and Lee University.

TIMOTHY JOST: There is a long history of the federal government sharing risks with private insurers. Federal subsidies to the National Flood Insurance Program, which Senator Rubio voted to extend last week, have for 35 years enabled private individuals to purchase flood insurance through the federal government.

WELNA: Whether House Republicans will actually try to attach a repeal of risk corridors to a debt limit hike remains in doubt. House speaker John Boehner was vague when asked about it yesterday.

REPRESENTATIVE JOHN BOEHNER: Well, a lot of opinions about how to deal with the debt limit, no decisions have been made.

WELNA: In fact, a growing number of House Republicans appear ready to let the debt limit rise with no strings attached.

David Welna, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.