When the right wing faux brouhaha blew up on keeping crappy plans for another year, I thought the proposed set of Democratic work-arounds would work in defusing the political issue with minimal long term damage to the risk pools:
Date change of grandfather status from day of PPACA being signed into law to 12/31/13 for individual only plans.
No new enrollment allowed into individual plans
This is an elegant kludge…
The key item as to why this is not serious damage to the risk pooling mechanism is point #2….
If this passes, the risk pool is a little bit older, and a little bit sicker than it would otherwise be in the Exchanges. That is okay, there are numerous risk and cost transfer mechanisms built int the law. A slightly sicker and more expensive risk pool in 2014 that normalizes as the grandfathered individual plans lose members in 2015 and 2016 would work out fine.
Reuters is reporting that this is basically how it is playing out. The people who were on medically underwritten individual insurance aren’t flocking to the Exchanges (yet), so the risk pool is a little bit sicker than projected:
Health insurer Humana Inc said on Thursday that it projected its enrollment mix in private plans through the exchanges created by President Barack Obama’s healthcare law will be, “more adverse than previously expected.”
Humana attributed the enrollment trend to regulatory changes allowing people to remain in previously existing plans not sold on the exchanges.
The risk corridors are the back end transfer mechanisms in the first three years that allows insurance companies to take a risk to see what the population that enrolls actually looks like. If a company guesses wrong, there is some federal money coming their way. These transfer and risk corridors are the only reason so many companies have been willing to jump into a new market segment in the first year.
These corridors and transfers are in conservatives’ sights as the next angle to take a bite out of Obamacare implementation. Krauthammer laid out the right wing argument last week:
First order of business for the returning Congress: The No Bailout for Insurance Companies Act of 2014.
Make it one line long: “Sections 1341 and 1342 of the Affordable Care Act are hereby repealed…”
First, Section 1341, the “reinsurance” fund collected from insurers and self-insuring employers at a nifty $63 a head. (Who do you think the cost is passed on to?) This yields about $20 billion over three years to cover losses.
Never heard of these?…
I am vaguely surprised that Section 1341 was not the Senate Republican demanded pay-for for unemployment insurance. But these two sections will be targeted this year and next. After that, it won’t matter too much past the end of 2015 as the pools should be close to predictable by then.
BTW — I’ve joined Twitter at bjdickmayhew