Despite Illegal Government Funding, ACA Exchange Plans Face Staggering Losses


In 2015, insurers may have lost as much as $1,000 per enrollee, despite government compensation through the reinsurance and “risk corridor” programs that are supposed to compensate insurers for high-risk subscribers, writes Brian Blase (Forbes, May 11, 2016). The Obama Administration has good reason to be concerned that other insurers will follow United HealthCare’s lead and withdraw from ACA. At a Capitol Hill event, Kansas Lt. Governor Jeff Colyer remarked that there may only be one insurer offering coverage in its exchange next year.

Predictably, people are gaming ACA by signing up only after they become ill.

Insurers are also gaming ACA to drive subscribers to plans with higher taxpayer subsidies.

Insurers’ problems will be much worse if federal District Court Judge Rosemary Collyer’s now-stayed decision in United States House of Representatives v. Sylvia Matthews Burwell, et al., is not reversed on appeal. Congress explicitly refused to appropriate money to reimburse the cost-sharing reductions that ACA requires insurers to make for low-income beneficiaries. The Administration has been making payments anyway.

A Ways and Means Committee investigation is ongoing about whether the Administration defied the law in making expenditures. Chairman Kevin Brady (R-TX) stated: “The more we learn, the more it’s clear that high-level administration officials knowingly circumvented Congress and undermined the Constitution.” Democrats accuse Republicans of “conducting a witch hunt in their crusade to dismantle the Affordable Care Act, which has twice been upheld by the Supreme Court,” writes Carl Hulsen (NY Times, May 30, 2016).

Rep. Brady accuses the White House of stonewalling on providing information essential for congressional oversight.

Highmark, a major player in ACA exchanges is suing the government for not meeting its contractual obligations. Money owed under the risk-corridor program is not being paid because not enough money was collected from insurers with lower-risk subscribers, the only money appropriated by Congress.

Further threatening the viability of the program are costly regulations. In efforts to boost enrollment, regulators interpret the law in ways that make it even costlier, writes Scott Gottlieb. “Those in charge of implementing the ACA traded the short-term political gain of slightly higher enrollment trends for the long-term stability of the program and its risk pools. The big premium spikes for 2017 are an economic reckoning of this shortsightedness.”

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