Good News on Obamacare
Now that it's being implemented, even if ever-so incompetently, . . . people are reading the Affordable Care Act.
In the ever-increasing likelihood that problems continue with Obamacare enrollment, . . . and even if the continuing problems raise costs, . . .say, because healthy young folks "pay" the nearly-unenforceable tax-penalty instead of taking the trouble to sign up, and the insured population comprises older and sicker individuals, . . . the Insurance Companies are protected ! ! ! The taxpayers will take up the slack.
Obamacare "Risk Corridors"
Each year the exchange plan's Insurers project how much their risk pool would cost overall, . . . their “target” cost. Section 1342 of the ACA states that the “target” amount is the total of all premiums paid minus administrative costs — that is, it’s the break-even point for the plan.
If they’ve significantly miscalculated—or, say, if a mandate delay causes adverse selection [less-than-predicted healthy young persons] that they couldn’t have predicted—Health and Human Services will take action.
The “action” involves a 50 percent bailout for costs that exceed 103% of the insurers’ cost target, and an 80% bailout for costs that exceed 108% of target.
If a plan undershoots its cost target, the Insurer has to pay HHS according to a similar formula for costs below 97 percent and 92 percent. [DonDiego opines this is unlikely given the current state of Obamacare.]
The hope was the plans that undershoot costs are supposed to pay for the ones that overshoot. But there is no such limit contained within the law, so if an industry-wide problem develops the government will pay out more than it collects through the program. This could be expensive—the CBO scored the health law as though risk corridors were budget neutral. [And that dear children is why the CBO estimate cannot be assumed accurate; the CBO must "score" using whatever method and parameters the Congress tells it to use, . . . and these may turn out to be wrong.-DD]
Ref: Now We Find Out What's In It
Uh-oh.
Well, if anyone was worried about the Insurance Companies suffering, he may rest assured, . . . the taxpayer will cover most of any possibly extensive losses.
