Insurers Rally to Defend Obamacare Risk Payments

GOP-sponsored bill seen as another bid to undermine health law

Supporters of President Barack Obama's health care law wave signs outside the Supreme Court after the court upheld Obamacare in June 2015. (Bill Clark/CQ Roll Call)
Supporters of President Barack Obama's health care law wave signs outside the Supreme Court after the court upheld Obamacare in June 2015. (Bill Clark/CQ Roll Call)
Posted July 8, 2016 at 6:17am

Insurers are ramping up lobbying to defeat legislation that would limit their payments under one of the 2010 health law’s stabilization programs, according to congressional staff and outside experts.  

The bill (S 2803), from Nebraska Republican Sen. Ben Sasse would slash in half the Department of Health and Human Services general management budget, unless the agency pays certain funds from the so-called reinsurance program to the Treasury Department. Until now, the agency has prioritized its payments to insurance companies and not yet paid into the Treasury, a practice it has justified under the health law (PL 111-148, PL 111-152).  

It’s something of a deja vu moment for insurers, who saw their payments under the so-called “risk corridor” program — another of three risk stabilization programs under the health law — stymied by riders in two recent budget deals that were sponsored by GOP Sen. Marco Rubio of Florida. In the first year of that program, insurance companies got just 12.6 percent of what they were due under the program’s rules — a shortfall that led to the bankruptcy of several plans.  

The Sasse legislation is unlikely to move through either chamber on its own, several sources on and off the Hill said. But like the Rubio provision, the language could be attached to a broader spending package that moves later this year. That prospect has insurance companies ramping up their outreach to members on both sides of the Capitol. Rubio is co-sponsoring Sasse’s bill, along with another Republican, Mike Lee of Utah.  

“There’s concern about the Sasse language because Rubio already won against risk corridors,” a Republican Senate aide said.  

The health plan lobbying comes in the wake of a recent report from the Obama administration that details the payouts insurers will get under the reinsurance program and another stabilization effort called risk adjustment. Both were intended to help minimize disruptions in insurance markets created by the health law, albeit in different ways.  

Insurers that received substantial payments under the reinsurance program aren’t keen on seeing those payouts dwindle next year, several outside experts said. Some are already warning that a change in the program will create uncertainty that could drive up consumers’ premiums.  

“They are concerned about it for the same reason that they were concerned about the risk corridors: This was part of the calculus, and the rules of the game are being changed. They’ve already set the 2016 premiums, they can’t change those premiums,” said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. “To change the rules retrospectively will hurt their bottom line and also have some other effects on the stability of the marketplace.”  

One industry source said there is a sense the bill is another attempt to undermine the 2010 health law, and is timely because the reinsurance program is set to expire at the end of 2016. The source also highlighted that the efforts to undermine the risk corridor program were all determined on party lines — and said the industry expects similar partisan differences to surround this legislation.  

The one person that the lobbying isn’t swaying? Sasse.  

“This is a textbook case of Washington cronyism: HHS is sending billions of dollars to insurance companies with teams of lobbyists but families who are already suffering Obamacare’s consequences haven’t seen a dime go to the Treasury,” the first-term senator said in a statement.  

Under the reinsurance program, HHS was supposed to collect $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016 from plans both on and off the exchanges, including self-funded plans. Insurers would get back $10 billion, $6 billion and $4 billion, respectively, in each of those years, to help cover unusually high medical expenses they might not have predicted in the new markets. The remaining funds would go to the Treasury each year.  

But HHS didn’t collect enough under the program, and decided through rule-making to prioritize its payments to insurers. The agency collected about $9.7 billion in 2014 and another $6.5 billion in 2015, paying out $7.9 billion and $7.7 billion to insurers in those years. About $500 million dollars has gone to the Treasury under the program so far.  

Final payments under the reinsurance program will be issued next year.


Get breaking news alerts and more from Roll Call on your iPhone or your Android.