Obamacare 'slush fund' for insurers massively underfunded

The third year of Obamacare open enrollment began on November 1, and with recent news about the program, you have to wonder if there will be a fourth.

More than half of the non-profit state insurance co-ops have gone belly-up.  Premiums have shot up double digits.  And the fund that is supposed to reimburse insurance companies for their losses is massively underfunded, according to Standard and Poors.

The Hill:

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.

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 marketable 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.

There is only one way to salvage the risk corridors:

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

Yeah...good luck with that, Barry.

Maybe the president thought that Republicans would eventually get on board the Obamacare train and bail out the ill-planned and ill-considered parts of the program.  Or, as many have suggested, the plan all along was for Obamacare to go under so that a single-payer government-funded health insurance program must be implemented.

Neither is going to happen.  Obamacare will sink or swim on its own merits.  And at present, no one is disposed to throw it a life preserver.

Hat Tip: Ed Lasky

The third year of Obamacare open enrollment began on November 1, and with recent news about the program, you have to wonder if there will be a fourth.

More than half of the non-profit state insurance co-ops have gone belly-up.  Premiums have shot up double digits.  And the fund that is supposed to reimburse insurance companies for their losses is massively underfunded, according to Standard and Poors.

The Hill:

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.

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 marketable 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.

There is only one way to salvage the risk corridors:

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

Yeah...good luck with that, Barry.

Maybe the president thought that Republicans would eventually get on board the Obamacare train and bail out the ill-planned and ill-considered parts of the program.  Or, as many have suggested, the plan all along was for Obamacare to go under so that a single-payer government-funded health insurance program must be implemented.

Neither is going to happen.  Obamacare will sink or swim on its own merits.  And at present, no one is disposed to throw it a life preserver.

Hat Tip: Ed Lasky