Before he became president, Donald Trump was known for stiffing people to whom he owed money. So it’s no surprise that, as president, Trump wants to stiff companies to which the government owes money.
Washington promised these payments when Congress passed the Affordable Care Act (ACA) in 2010. Known as risk corridors, they were one of three programs designed to help health insurers that offered policies on the ACA exchanges.
The health care law prohibits companies from charging higher premiums for people with preexisting conditions. Because of that major change, those who crafted the law knew that insurers would be dealing with many new patients who hadn’t been able to afford health insurance. But how many? How sick and costly would they be? Companies were uncertain about their new risk pools.
To help stabilize the exchange markets, the government would reimburse insurers that had big losses and paid out more claims than anticipated. The risk corridor program would last for only the first three years of the exchanges — 2014 through 2016. By that point, it was anticipated insurers would be able to correctly price their risk and thus their premiums.
Under Republican rule, Congress added a similar program to the Medicare prescription drug plan that lawmakers approved in 2003. It has succeeded.
With the Affordable Care Act, however, Republicans oppose risk corridors. Because they want the law to fail — without offering a suitable replacement — Republicans blocked the Obama administration from issuing all but about 12 percent of those risk corridor reimbursements. For 2014 and 2015, combined unpaid reimbursements were $8.3 billion. Including 2016, the total could be $15 billion. The GOP proposes a similar ban for the 2016 payments, and Trump agrees.
During his brief presidential campaign, Sen. Marco Rubio, R-Fla., actually bragged about his role in this campaign to cripple the Affordable Care Act. Rubio introduced the first spending ban. Rubio regularly has called the risk corridor program a “bailout fund.”
He claimed to have saved taxpayers $2.5 billion, the amount of payments owed for 2014.
In fact, the risk corridor program isn’t a “bailout fund.” That’s one of many lies Republicans have told about the Affordable Care Act. A bailout keeps a company from going under. The Troubled Asset Relief Program of 2008 bailed out financial companies. The auto bailout of the same year saved General Motors and Chrysler.
In contrast, the risk corridor program was as an incentive. The goal was to maximize the number of insurers in an exchange, which would increase competition and lead to lower premiums.
Instead, the government’s failure to make the payments drove companies out of the exchanges and limited choices for consumers. Non-profit co-ops especially suffered.
More than half dropped out. The president of an Oregon co-op said, “We were stable, had a growing membership and could have been successful if we had received those payments.”
Some big names got hit even harder. Affiliates of Blue Cross/Blue Shield lost a collective $3.6 billion in 2014 reimbursements. Many new customers were drawn to Blue Cross because of its reputation.
Some companies fought back. They filed lawsuits, arguing that the language of the Affordable Care Act trumps what Rubio and Co. did. In February, the U.S. Court of Claims awarded an Oregon company $214 million. The CEO of Minuteman Health, one of the plaintiffs, told Politico, “Even the federal government is subject to the rules.”
Rubio, of course, sees it differently. “We’re going to follow the law,” he said during a recent Facebook Live event, “and the law says you’re not supposed to spend taxpayer money to bail out these companies.” Why would be admit at this point that what he calls a bailout isn’t a bailout? An email Monday to Rubio’s deputy press secretary seeking comment on this issue was not returned.
As it turns out, that three-year projection seems to have been accurate. Insurers on the exchanges are making money, having learned to price their risk.
Trump and Rubio may rail against the Affordable Care Act, but after yet another repeal-and-replace failure, other Republicans speak of working with Democrats to make the law work better. That could include making those risk corridor payments before the courts order it. Continuing to oppose an increasingly popular law amounts to stiffing the American people.
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