The government funding bill colloquially called the CRomnibus that the House passed on Thursday night included a GOP-proposed change to an Obamacare program long loathed by Republicans.
A House aide confirmed to TPM that Republican staffers requested the change to the so-called risk corridor program, which is designed to keep premiums stable by making payments to insurers if they lose more money than expected in the law’s first few years.
Some health policy wonks picked up on the language, but it received negligible attention compared to the campaign finance and Dodd-Frank provisions that nearly derailed the spending bill in the House on Thursday night.
The way the risk corridor program works: Insurers estimate in advance how their insurance pools will look and if in the end they’re significantly better than estimated, they pay money into the program; if they’re significantly worse than estimated, they are paid money by the program.
The CRomnibus, which funds most of the government through the next year, prohibits the Health and Human Services Department from transferring funds from other sources to fund the program. The practical impact, one policy expert told TPM, is that HHS can therefore only use money brought into the program to make payouts, effectively making it revenue neutral.
“As far as anyone can tell, that’s what’s going on,” Timothy Jost, a health law professor at Washington and Lee University who is supportive of the law, told TPM. In theory, if the program doesn’t bring in enough money to make its payouts, that could mean insurers will have to — at the very least — wait a year before getting their money. In turn, that could have a negative impact on 2016 premiums if insurers have to take a loss in the meantime.
“I think it’s important, but I don’t think it’s the end of the world,” Jost said, explaining that major insurers should have the bandwidth to absorb any adverse effects. But smaller insurers might be relying on the risk corridor program, along with the law’s reinsurance and risk adjustment programs that are also designed to keep prices stable in the law’s early years, to remain solvent.
But any negative effects on insurance companies — and then, by extension, Obamacare — are a policy win for Republicans, who have derided risk corridors as a taxpayer-funded bailouts. Sen. Marco Rubio (R-FL) proposed a bill last year to repeal the program entirely.
America’s Health Insurance Plans, the industry’s lobbying group, told TPM that they were aware of the change and had concerns about it. An official statement alluded to the potential negative effects on premiums.
“American budgets are already strained by health care costs, and this change will lead to higher premiums for consumers and make it more difficult to achieve affordability,” Clare Krusing, an AHIP spokesperson, said. “Our focus should be on changes to the law that will lower costs — like repealing the health insurance tax — not those that drive premiums higher.”
The Senate is expected to take up the CRomnibus, which is supported by the White House and Senate Democratic leadership, on Friday or Monday. The White House didn’t immediately respond to TPM’s request for comment about the risk corridor provision.
