The Supreme Court has ruled that the federal government owes insurers $12 billion in unpaid Affordable Care Act "risk corridor" payments.
Republicans originally called these funds a "bailout" and stopped them, destabilizing the insurance marketplace.
supremecourt.gov/opinions/19pdf…
Republicans originally called these funds a "bailout" and stopped them, destabilizing the insurance marketplace.
supremecourt.gov/opinions/19pdf…
The ACA risk corridor program just ruled on by the Supreme Court was a temporary mechanism where insurers that made more money than expected paid into a pool and insurers that lost money got funds from the pool. The problem was, many more insurers lost money than made money.
Republicans called the ACA risk corridor program a "bailout," and successfully pushed to make it budget neutral. The result was that insurers that lost money got paid pennies on the dollar. With the Supreme Court decision, those insurers will now get their money.
Don't confuse the ACA's risk corridors, which the Supreme Court just ruled on, with reinsurance or risk adjustment (the other two Rs). If you do, your policy wonk card will be taken away.
kff.org/health-reform/…
kff.org/health-reform/…
The ACA's 3 Rs:
Risk corridors = government shares in insurer losses and profits
Reinsurance = government covers part of the expense of high-cost patients
Risk adjustment = insurers with healthier patients pay into a pool and those with sicker patients receive from the pool
Risk corridors = government shares in insurer losses and profits
Reinsurance = government covers part of the expense of high-cost patients
Risk adjustment = insurers with healthier patients pay into a pool and those with sicker patients receive from the pool
The Supreme Court's decision is a vindication of the ACA's original structure. If the money had been paid out years ago as intended, it no doubt would have stabilized the marketplace and given consumers more choice. Now, it's basically a $12 billion windfall for insurers.
Some insurers might have to pay some of this $12 billion windfall back to consumers as rebates (depending on which year it's attributed to in an accounting sense). But, some of the nation's biggest insurers, who left the ACA market, will be able to pocket it.
Health insurers will welcome this $12 billion windfall from the Supreme Court. But, politically speaking, it may also weaken their case for any relief from Congress in the midst of the current crisis.
