GOP Prepares To Take Economy Hostage Unless Democrats Vote To Raise Obamacare Premiums
On Friday, the Washington Post’s Robert Costa reported that House Republicans are floating a strategy to raise the nation’s debt ceiling for one year in exchange for a repeal of Obamacare’s so-called “risk corridors” — a temporary financial shock absorber that the GOP is misleadingly castigating as an “insurance company bailout.”
But make no mistake — this is a provision whose ultimate goal is to protect American consumers from potential premium increases, not to give insurers a handout. And the GOP has pushed the exact same “bailouts” on other occasions, including for the Medicare Part D prescription drug program for seniors.
Risk corridors are a system of redistributing insurers’ losses and profits in order to create a more stable insurance pool in Obamacare’s marketplaces. Since these marketplaces represent the first time that the individual insurance industry must operate under federal standards, and ultimately compete against each other without discriminating against sick people or selling a shoddy product, lawmakers anticipated that insurers might have a hard time figuring out exactly where they should set their prices in the law’s nascent years. When deciding monthly premiums, insurance companies had to approximate how many people would enroll, how old or sick they would be, how much the insurers would have to pay out in medical claims, and a host of other factors — essentially a series of educated guesses.
http://thinkprogress.org/health/2014/01/31/3234491/house-gop-economy-hostage-risk-corridors/
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