February 19, 2014
According to the text of Obamacare, the health law’s risk corridors—the insurance industry backstop that’s been dubbed a bailout—are only supposed to last through 2016. For the first three years of the exchanges, insurers who spend 3 percent more on health costs than expected will be reimbursed by the federal government. It’s symmetrical, so insurers who spend less will pay in, but there’s no requirement that the program be revenue neutral. After 2016, the program is scheduled to sunset, leaving insurers fully on the hook for any losses they might incur within the exchanges.
But now the Obama administration appears to be considering an extension of the provision beyond 2016, according to The Washington Examiner’s Susan Ferrechio:
The Obama Administration may extend beyond 2016 a federal reimbursement program for health insurance companies that lose money by participating in the newly created health care exchanges.
Industry insiders told the Washington Examiner a plan to extend the Affordable Care Act’s “risk corridors” are under discussion, but that administration officials have not made a final decision.