⚠️ THREAD: I'll be posting a write-up on this later today, but this morning's #SCOTUS ruling in the #RiskCorridorMassacre case could be a much bigger deal for millions of people than you may think. Here's why: 1/
This morning, the U.S. Supreme Court issued an 8-1 ruling in favor of a bunch of health insurance carriers who were suing the federal government over $12 billion which has been owed to them from 2015 - 2017 via the #ACA's "Risk Corridor" program. 2/
The Risk Corridor program gets kind of wonky, but it was basically one of the "training wheel" programs put in place during the first few rocky, chaotic years of the #ACA. A similar program has existed for Medicare Part D for years without controversy. 3/
The basic idea is that carriers which did *better* than expected had to pay a portion of their profits into a kitty; carriers which did *worse* than expected were promised partial reimbursement via that same fund. 4/
If the amount paid *in* was greater than the amount paid *out*, the federal government got to keep the difference. If the amount paid out was greater, the feds had to cover the difference. It was a calculated risk for all involved. 5/
However, halfway through the 2nd Open Enrollment Period, Congressional Republicans insisted on making the RC program *budget neutral*...that is, they forbade the feds from covering any losses in the RC fund: 6/ talkingpointsmemo.com/dc/obamacare-c…
If the amount paid into the fund had been larger than the amount owed out, this would've been a moot point. Instead, however, most carriers seriously misread the #ACA market and lost money, and in the end, only a small fraction of what they were owed was paid to them. 7/
You may recall in late summer/early fall of 2015, over 2 dozen insurance carriers (most of them the nonprofit start-up "Co-Ops" also created by the #ACA) went belly-up. There were multiple reasons for this, but a major one was the non-payment of RC funds they were counting on. 8/
Anyway, in part as a result of the #RiskCorridorMassacre (which @MarcoRubio claimed "credit" for but which was actually the brainchild of Fred Upton, Jack Kingston Fred Upton and Jeff Sessions), over 800,000 people lost their coverage, 2 dozen companies went out of business... 9/
...hundreds of people lost their jobs, and #ACA insurance premiums jumped more than they would have otherwise as the decreased competition meant more monopolies in more counties/states in 2016 and beyond. 10/
Rubio hogged credit for the #RiskCorridorMassacre to try and build "fiscal conservative" street cred for his (doomed) 2016 Presidential bid. Ironically, as @bjdickmayhew notes, those same increased premiums caused by it could have cost the feds MORE... 11/
...in the form of increased #ACA subsidies than it "saved" by breaking contractually-owed payments. And of course with this morning's ruling, it's very likely that the feds won't even have "saved" that $12 billion in the end anyway, since they have to pay it out after all. 12/
In other words, as @dylanlscott put it:
BUT WAIT, THERE'S MORE!
On the surface, today's ruling wouldn't appear to mean much to the average American. It *looks* like a bunch of health insurance companies just got a fat $12 billion windfall at taxpayer expense, and technically that's true. HOWEVER... 14/
On the surface, today's ruling wouldn't appear to mean much to the average American. It *looks* like a bunch of health insurance companies just got a fat $12 billion windfall at taxpayer expense, and technically that's true. HOWEVER... 14/
...thanks to ANOTHER #ACA provision included by then-Senator @alfranken, the Medical Loss Ratio (MLR) rule, a big chunk of that $12 billion may end up being paid back to millions of Americans after all in the form of rebate checks! 15/ acasignups.net/20/02/18/reven…
It won't be all of the $12 billion. For one thing, it could be years (?) before payments are actually made. Even then, some of it will go to creditors of the insurers which went belly-up. Not every carrier is owed money, and we don't know how it will be recorded anyway. 16/
If the money is recorded on a cash basis, there'll be a one-time lump sum recorded in the year it's paid (I'll assume 2021?). If that happens, then there will be MASSIVE MLR rebate checks going out to millions of #ACA enrollees in 2022, 2023 & 2024. 17/
If, however, the money has to be recorded via accrual accounting (i.e., if they have to adjust their records from 2015, 2016 & 2017), it'll be an unholy actuarial/bookkeeping mess. Imagine having to go back and tack on, say, $100 million to your revenue from 7-8 years ago. 18/
As messy as that'd be for the carriers & their accountants, it will also make MLR rebate payments even more surreal. Someone enrolled in an #ACA exchange policy back in 2015 could potentially receive a rebate check in 2021 even if they've long since dropped that policy. 19/
What about carriers which have since gone bankrupt, been liquidated, or been bought out by another carriers? I have no clue how that would be dealt with if the payments have to be recorded via accrual accounting. As @bjdickmayhew always says, "so many billable legal hours..." 20/
Of course, I could also be wrong about how the payments are recorded altogether. I'm not a lawyer, an accountant or an actuary. Check with folks like @nicholas_bagley, @bjdickmayhew, @wcsanders, @rebeccastob and @clinkeyoung for more info on that. /END
P.S. There's also another wildcard factor: The #TexasFoldEm lawsuit. If the SCOTUS does end up striking down the entire ACA (effective, say, 12/31/21), on top of all the other chaos it would cause, I have no idea whether MLR payments would have to be paid out after that date.
