Sen. Marco Rubio, R-Fla., introduced legislation Tuesday to repeal a lesser-known Obamacare provision called “risk corridors” that protects insurance companies from potential unexpected changes in marketplace composition.
The bill is a not-so-subtle attack on the health care law, as its implementation would cause serious damage to the insurance exchanges.
The risk-corridors provision is essentially a safety net for insurers during the first three years of the law’s implementation, designed to protect the marketplace as a whole if more expensive patients sign up than anticipated. Insurance companies set cost estimates ahead of time. If costs end up being higher, the government pays part of the difference; if costs are lower, the insurance company pays the government.
Rubio’s bill, which he dubbed the Obamacare Bailout Prevention Act, would eliminate risk corridors altogether.
“[The bill] will ensure the Obama administration doesn’t have unaccountable blank-check-writing authority to bail out insurance companies at the expense of taxpayers,” Alex Conant, a spokesman for Rubio, wrote in an email. “Rubio’s bill will fully repeal the risk corridor provision in Obamacare, preventing a bailout under the existing risk corridor provision of Obamacare.”
The risk-corridors provision has attracted more attention recently, following the announcement of President Obama’s insurance cancellation ‘fix,’ which would allow insurers to extend policies that do not comply with the Affordable Care Act for another year.
“When Obamacare was debated and passed in 2009 and 2010, none of its proponents, including the president, told the American people that the law granted the federal government the authority to bail out insurance companies at the expense of taxpayers,” Rubio wrote in an op-ed in The Wall Street Journal on Tuesday. “But now their dirty little secret is out, and it should be wiped out from the law.”
However, the risk-corridors provision is important for avoiding the so-called “death spiral” of high costs and low participation that could jeopardize the law. A lack of risk protection could cause insurers to stop participating in the exchanges, or raise their premium rates.
The president has already told insurers that the administration’s assistance for them will be limited.
The proposed legislation is sure to attract some Republican support, and has already gotten the backing of numerous conservative organizations, including FreedomWorks, Heritage Action, and Americans for Tax Reform.
The bill is cosponsored by Sens. Saxby Chambliss, R-Ga.; James Inhofe, R-Okla.; Mike Lee, R-Utah; Mitch McConnell, R-Ky.; Rand Paul, R-Ky.; and David Vitter, R-La.