HHS Publishes Rules To Provide Insurers With Extra Funds Due To Risk Corridors

Remember who Conservatives warned that Team Obama would bail out insurers if they started losing money thanks to Obamacare? And how they were told they were a bunch of crazy wingnuts? And to stop going all conspiracy-ee? Yeah, about that

(The Hill) Health insurance companies can count on funds from the government if ObamaCare’s risk corridor program does not sufficiently cover losses that are higher than expected this year.

This news was published in regulations Friday outlining how the law’s health insurance exchanges will operate in 2015.

The risk corridors are designed to stave off premium increases by transferring money from insurers that see better-than-expected results to those that see worse-than-expected results.

The Obama administration had previously said the temporary program would be implemented in a budget-neutral way, without separate government funding. But federal health officials appeared to step back Friday from that promise, which was made under heavy criticism from Republicans who call the risk corridors a “bailout” for insurance companies.

Must be nice to be an insurance company in Ocare exchanges. They join a program, offer restricted networks, increase premiums and deductibles, still lose money, and get a bailout for losses. Unlike, say, the majority of companies in the country who lose money and don’t get a handout from Los Federales.

“That said … in the unlikely event of a shortfall for the 2015 program year … [the Department of Health and Human Services] will use other sources of funding for the risk corridors payments.”

And what would those other “sources” be? Neither the article, nor the Washington Examiner one, nor the HHS document, say. And let’s not forget, the risk corridors program also takes some of the profits away from insurers who make too much profit, comrades. Don’t feel bad for the insurers, though: they voluntarily put themselves in these positions.

Fortunately, insurers have found more ways to attempt to keep premiums in check, called “reference pricing”

(AP) The Obama administration has given the go-ahead for a new cost-control strategy called “reference pricing.” It lets insurers and employers put a dollar limit on what health plans pay for some expensive procedures, such as knee and hip replacements.

Some experts worry that patients could be surprised with big medical bills they must pay themselves, undercutting financial protections in the new health care law. That would happen if patients picked a more expensive hospital – even if it’s part of the insurer’s network.

The administration’s decision affects most job-based plans as well as the new insurance exchanges.

As Ed Morrissey notes

How does “reference pricing” work? It treats anything above the flat-rate limit covered by insurers as out-of-network costs, even if a patient is seeing a provider inside the network. Before ObamaCare, insurers would negotiate in-network prices for these procedures, and providers were forced to accept them as payment in full. Now providers will have much less incentive to agree to that kind of pricing structure, and instead go after the patients for the balance.

It works like this: you have a procedure that costs $20k. But, the insurer will only cover $15k. So, you pay $5k. And, this cost does not factor into either the yearly deductible nor yearly cap. Hooray, Ocare! Hooray “Affordable” Care Act!

Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.

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