The Obamacare program Republicans have criticized as a “bailout for insurance companies” will actually save the federal government about $8 billion, the Congressional Budget Office said Tuesday.
The program in question, known as risk corridors, was designed to stabilize insurance premiums if the pool of people who sign up for coverage is different than expected.
Many Republicans, led by Sen. Marco Rubio, want to repeal the program — perhaps as part of an agreement to raise the debt ceiling. But the program will probably save the government money, CBO said in its revised budget figures.
Here’s how risk corridors work: When insurers’ real-life costs are higher than what they expected when they set their premiums, the government absorbs some of the losses. When insurers’ costs are lower than expected, they pay into the program.
In effect, the government shares in unexpected costs as well as unexpected savings. And the savings will likely be bigger, CBO said.
Insurers will probably receive about $8 billion in risk-corridor payments, CBO said, but will pay in roughly $16 billion — for a net savings to the government of about $8 billion.
CBO Director Doug Elmendorf said that doesn’t mean repealing the risk corridors would add $8 billion to the deficit — insurers change their behavior because they’re counting on these payments, he noted, so repeal would need to be scored on its own.
Still, today’s estimate certainly makes it easier for vulnerable Democrats to resist any political pressure to repeal risk corridors. It might also reflect some underlying optimism about Obamacare enrollment.
Everyone knows overall enrollment will be somewhat lower than expected — CBO says about 1 million lower — because of the botched rollout of HealthCare.gov. That uncertainty has stoked fears that insurers will end up with sicker, more expensive patients than they planned, causing them to raise premiums next year.
But by projecting that risk corridors would save the government money, CBO is saying it expects insurers’ costs, overall, to be lower than expected — not higher.
“Despite the technical problems that have impeded enrollment in exchanges “¦ CBO expects that premium bids will still exceed costs,” the budget office said.
Risk corridors wouldn’t save the government money if insurance markets nationwide were flooded with sick, expensive patients. In a worst-case scenario, insurers would have to pay out far more claims than they anticipated when they set their premiums, triggering risk-corridor payments from the government and then premium increases next year.
By predicting savings from the risk-corridor program, CBO isn’t necessarily predicting that Obamacare’s exchanges will be healthier than expected; there are other reasons for spending to be low. But the projection is a sign that CBO doesn’t expect the kind of exceptionally bad risk pool that could threaten the exchanges’ basic solvency.
Elmendorf noted that there is considerable uncertainty in CBO’s analysis of how the health care law will affect insurers and said the $8 billion figure was in the middle of a wide range of possibilities. It could save the government more, he said, or it could end up costing taxpayers.
What We're Following See More »
"The Senate was expected to be back in session at noon, while House lawmakers were told to return to work for a 9 a.m. session. Mr. Trump on Friday had canceled plans to travel to his private resort on Palm Beach, Fla., where a celebration had been planned for Saturday to celebrate the anniversary of his first year in office."
"A stopgap spending bill stalled in the Senate Friday night, leading to a government shutdown for the first time since 2013. The continuing resolution funding agencies expired at midnight, and lawmakers were unable to spell out any path forward to keep government open. The Senate on Friday night failed to reach cloture on a four-week spending bill the House had already approved."
"The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National Rifle Association to help Donald Trump win the presidency." Investigators have focused on Alexander Torshin, the deputy governor of Russia’s central bank "who is known for his close relationships with both Russian President Vladimir Putin and the NRA." The solicitation or use of foreign funds is illegal in U.S. elections under the Federal Election Campaign Act (FECA) by either lobbying groups or political campaigns. The NRA reported spending a record $55 million on the 2016 elections.
"Hundreds of new and supplemental FARA filings by U.S. lobbyists and public relations firms" have been submitted "since Special Counsel Mueller charged two Trump aides with failing to disclose their lobbying work on behalf of foreign countries. The number of first-time filings ... rose 50 percent to 102 between 2016 and 2017, an NBC News analysis found. The number of supplemental filings, which include details about campaign donations, meetings and phone calls more than doubled from 618 to 1,244 last year as lobbyists scrambled to avoid the same fate as some of Trump's associates and their business partners."