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Health Plans And Taxpayers

The Republicans have been focusing on the way Obama Administration is repaying the insurers who are participating in Federal health insurance exchange under risk adjustment programs established by ACA. The Affordable Care Act has included three risk adjustment programs aimed at stabilizing exchanges for the first years as insurers learned on pricing their products. The three risk adjustment programs are the risk corridor program, the reinsurance program, and the risk adjustment program.

However, reports say that insurers are experiencing financial difficulties on exchanges despite of the protective programs, even after three years. This is the reason why the Administration is trying to interpret the way risk adjustment programs work in ways that can help the insurers who are struggling to cop up.

ACA opponents in the Congress have been very critical of the actions of the Administration with respect to the reinsurance program. This program was introduced as a temporary one that needs all plans to make a per-beneficiary payment of the flat amount into fund that redistribute the payments to those insurance plans with high cost enrollees.

A part of the reinsurance fund is planned to go to Treasury. This is to repay taxpayers the money that is used to create ACA exchanges and paid for the out of general tax revenues. Even though HHS was unable to collect enough money for 2014 to cover the complete repayment costs, ACA specifies that some amount of money should be repaid every year to Health Plans and taxpayers.

The Administration chose to compensate insurers fully and under-compensate the Treasury Department. This is a big relief for the struggling insurers, but the Republicans are portraying the move as a taxpayer “bailout” for the insurers. The Republicans argue that law clearly needs the Treasury to be repaid with maximum preference.

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ACA Risk Adjustment

Interestingly, a recent report from Government Accountability Office (GAO) supports the Republicans. It is true that the GAO does not have any enforcement authority, but their findings are valuable reinforcement to the Republicans’ argument. The report was made as per the request of many Republican legislators from the Senate and the House.

It seems that the program once again is going to collect less money in 2016 than necessary to repay the taxpayers and insurers for the expenses of 2015.

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