The Republicans only had to do 1 thing to cripple the Affordable Care Act, and they did it...
Much is being said about the increasing premiums and the reduction in choices under the Affordable Care Act. By far the greatest cause of these problems was the betrayal of the insurance companies by the U.S. House of Representatives.
Providing health insurance for a large group of individuals without having had prior experience with that group is very risky, especially when preexisting conditions are allowed and lifetime maximums are removed. The Affordable Care Act included a premium stabilization provision ("risk corridors" 1) that was designed to help cap insurance companies' risk in this uncertain environment. If claims paid by an insurer exceed a certain level, the provision would kick in and the insurance company would get help covering its loss. This provision was/is so important that House Speaker Paul Ryan's “A Better Way Healthcare Initiative” replacement plan includes "risk pools" to protect insurers 2, and he's willing to put aside $25 billion over 10 years to fund it 2,3. Secretary of Health and Human Services Tom Price’s plan provides $3 billion for similar risk pools over 3 years.4
So it would seem everyone is in agreement that some type of risk pool or risk cap is necessary to help insurers deal with the unpredictable nature of individual health insurance policies.
What happened? Why did premiums go up? Why did insurers pull out? When insurance companies submitted their bills under the Affordable Care Act’s risk corridor provision, the Republican controlled congress funded only $362 million (or 12.6 percent) of the $2.87 billion requested by insurers in 2014 5. This single act of betrayal by the House (whereby the risk coverage that had been assured when they set their premiums was not paid) made it inevitable that rates would rise and that some insurers would withdraw their plans. Insurers had to increase their rates to cover the risk that the ACA said Congress would cover.
Congressional betrayal continued in 2015 and 2106, such that the limited funds available in 2015 and 2016 were still being used to pay off 2014 obligations, and the U.S. Department of Health and Human Services notified insurers that they should anticipate no payments for the 2015 risk corridors 6.
The U.S. House of Representatives betrayed ALL of us when they knowingly withheld risk corridor payments necessary for the Affordable Care Act to work. They knew that their action would raise premiums, and reduce choice. I write this in the sincere hope that Republicans and Democrats will work together to make our healthcare system work.
SOURCES
1 Public Law 111-148 Patient Protection and Affordable Care Act, Section 1342 . Establishment of risk corridors for plans in individual and small group markets"
2 www.politico.com Concerns rise in New York over Republican proposal for high-risk pools, Dan Goldberg, 01/18/17 05:28 AM EST, and http://www.forbes.com/sites/realspin/2017/01/28/will-paul-ryans-obamacare-replacement-work-for-people-with-pre-existing-conditions/#7282c650c3a6
3 abetterway.speaker.gov “High Risk Pools”, Page 21
4 www.healthmarkets.com “Tom Price’s Healthcare Proposal: 7 Changes You Need to Know About” Item 2, “Provide Funding for Risk Pools”
5 www.law360.com “ACA Risk Corridor Funding Falls Short, Litigation Ensues”, Law360, New York (June 9, 2016, 10:57 AM EDT)
6 Health and Human Services Memo “Risk Corridor Payments for 2015”, September 9, 2016. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/Risk-Corridors-for-2015-FINAL.PDF
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