Excerpted from Yahoo News: The insurance industry may be next in line to receive a hefty government bailout. That’s what could happen if signups for Obamacare fall short of expectations triggering an obscure provision in the Affordable Care Act that makes up any serious losses.
The potential price tag: billions of taxpayer dollars over a 3-year period.
So-called “risk corridors” were included in the 2010 health law to compensate insurance companies for major coverage losses in the event that far more older and sick people signed up for health plans than younger, healthy people and drove up their costs after they had set the premiums. If actual claims exceed projections by more than 3 percent under Obamacare, the government will compensate the industry for those losses.
The new federal and state-run insurance exchanges – plagued by hundreds of technical glitches and other operational problems – have reported signing up just 106,185 people nationwide through Nov. 2, amid signs that relatively few young adults are turning to the program for coverage.
Even with so much uncertainty, the Department of Health and Human Services will end up spending “hundreds of millions of dollars” to compensate insurance companies for their losses in the coming year. That cost explode over three years if the administration’s drive to sign up at least 7 million people by early next year turns out to be a bust.
“We’re probably talking about under a half-billion-dollars initially in the short term, but it could well be over $1 billion in the long term,” said Michael Tanner, a health care expert with the libertarian Cato Institute. Read the whole thing
http://patdollard.com/2013/11/exposed-secret-insurance-industry-bailout-clause-in-affordable-care-act-keeps-obamacare-alive-no-matter-how-few-people-sign-up/
