User:Oceanflynn/sandbox/Risk corridors (ACA)

Temporary Risk Corridors Program under the PPACA section 1342, was a temporary risk management device to encourage reluctant insurers into the "new and untested" ACA insurance market during the first three years that ACA was implemented (2014-2016). For those years the Department of Health and Human Services (HHS) "would cover some of the losses for insurers whose plans performed worse than they expected. Insurers that were especially profitable, for their part, would have to return to HHS some of the money they earned on the exchanges" According to an article in Forbes, risk corridors "had been a successful part of the Medicare prescription drug benefit, and the ACA's risk corridors were modeled after Medicare's Plan D." They operated on the principle that "more participation would mean more competition, which would drive down premiums and make health insurance more affordable" and "[w]hen insurers signed up to sell health plans on the exchanges, they did so with the expectation that the risk-corridor program would limit their downside losses." Department of Health and Human Services (HHS) "would cover some of the losses" for qualified health plans (QHPs) "whose plans performed worse than they expected. Insurers that were especially profitable, for their part, would have to return to HHS some of the money they earned on the exchanges."

Context
ACA provided three ways to control risk for insurers in the individual and business markets: temporary reinsurance, temporary risk corridors, and permanent risk adjustment. Temporary reinsurance for insurance for insurers against unexpectedly high claims was a program that ran from 2014 through 2016. It was intended to limit insurer losses. Risk adjustment attempts to spread risk among insurers to prevent purchasers with good knowledge of their medical needs from using insurance to cover their costs (adverse selection). Plans with low actuarial risk compensate plans with high actuarial risk. Of the three risk management programs, only risk adjustment was permanent.

The ACA's risk corridor program was "devised to shelter insurers from unexpected losses in covering Affordable Care Act customers from 2014 through 2016." The system of risk corridors encouraged insurers to enter the "novel" ACA by helping them "balance risks balance risks by taking funds from insurers that turned out to be unexpectedly profitable and use the money to cushion others’ losses".

It applied to "individual and small group qualified health plans".

Not budget neutral
The risk corridors succeeded in attracting ACA insurers. The program did not pay for itself as planned with "accumulated losses" up to $8.3 billion for 2014 and 2015 alone. Authorization had to be given so that HHS could pay insurers from "general government revenues". Congressional Republicans "railed against" the program as a 'bailout' for insurers.

Taxpayer Bailout Protection Act (proposed May 2014)
Representatives Bill Cassidy (R-La.) and Leonard Lance (R-N.J.) proposed a bill H.R. 4406, also known as the Taxpayer Bailout Protection Act, that would "impose restrictions on Obamacare's Temporary Risk Corridors Program by making sure it is budget neutral."

Consolidated Appropriations Act, 2014 (Section 227)
A provision was "inserted" in a "2014 spending bill" that forbid Health and Human Services from using "any money other than what came from profitable insurers." Then-Rep. Jack Kingston (R-Ga.), on the Appropriations Committee that funds the Department of Health and Human Services and the Labor Department "[slipped] in a sentence" — Section 227 — in the "massive" appropriations Consolidated Appropriations Act, 2014 (H.R. 3547) that said that no funds in the discretionary spending bill "could be used for risk-corridor payments." This effectively "blocked the administration from obtaining the necessary funds from other programs" and placed Congress in a potential breach of contract with insurers who offered qualified health plans, under the Tucker Act as it did not pay the insurers.

Senator Marco Rubio
Congressional Republicans "railed against" the program as a 'bailout' for insurers. In 2013 Rubio introduced a bill to repeal the risk-corridor program, but it failed to pass. Rubio had claimed to "lead "the charge" and introduced "a measure that drove insurers out of business and forced a million Americans to find new health coverage." In his 2015 presidential campaign, Senator Marco Rubio(R-Fla.) claimed he had "inserted" the 2014 provision in the 2014 appropriations bill that would save the federal government billions. In an November 2016 article published in the New England Journal of Medicine, author Nicholas Bagley clarified that ...

Sylvia Burwell
He cited a 2016 letter from Fred Upton, Chairman of the congressional Committee on Energy and Commerce and Frank Pallone to Sylvia Burwell, then-SecretaryDepartment of Health and Human Services (HHS) challenging the claim that the Government had to pay insurers.

Moda Health v the US Government (2017)
On February 10, 2017, in the Moda Health v the US Government, Moda, one of the insurers that struggled financially because of the elimination of the risk corridor program, won a "$214-million judgment against the federal government". Justice Thomas C. Wheeler stated, "the Government "made a promise in the risk corridors program that it has yet to fulfill. Today, the court directs the Government to fulfill that promise. After all, 'to say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government."