Tornado Alley (PROG)

[Maria56]

Instead of demanding anything from a Democrat, I suggest that you read the following CAREFULLY. The "Obamacare disaster" that Republicans keep harping about was engineered by f'ing REPUBLICANS.

Risk Corridors, or How Marco Rubio Broke Obamacare

By way of introduction, before we get into the meat of this topic, I want to clarify a few things. First, I am NOT, in any way, employed in the insurance business. I'm an electronics engineer by trade. One of my dearest and longest-standing friends will soon be retiring from the re-insurance business- i. e., providing risk mitigation for insurance companies, which is in no small part, what this piece is about - but I claim no personal expertise in the insurance field. I do stay informed, however, and have replied to many posts on this site regarding the ACA with brief references to the material presented below. A few of the original authors of those pieces (a tip of the hat, in particular, to Brooklyn Bad Boy on this score) have concurred with my assessments, and have suggested that a more detailed post on the topic of Risk Corridors might be a good idea. So, without further ado ...

Remember a few weeks ago, when crooked donnie asked us "Who knew that health care was so complicated?" Y'know who knew? The 535 members of the 111th congress, and all of their aides, who spent nearly a full year drafting the Affordable Care Act, that's who. As the majority-Republican 115th Congress flails away at trying to repeal the ACA, each and every Republican legislator is quick to tell us how miserable the plan always was, and how insurers are fleeing the so-called "marketplace." What they won't tell you is why it is that the insurers are running away from a plan that they had no small hand in creating. The answer is obvious - the plan was changed, to the detriment of the insurers ... by a US Senator from the state that likely consumes more health care per capita than any other.

Lets get REALLY basic regarding insurance for a moment, OK? The whole idea behind any kind of insurance is that a very large number of people each contribute a nominal fee to a pool, and when an individual contributor has some sort of an emergency that is covered by the insurance plan, he or she can make a claim against the pool to cover the expenses resulting from the emergency. Simple, right? One obvious feature of such an arrangement is that more individuals there are contributing to the pool, the more efficient the system becomes. That, of course, was the rationale behind the ACA's individual mandate ... the goal was 100% participation - ideally, EVERYBODY gets coverage!

Now, prior to the ACA, health insurers had an unfortunate tendency to cherry-pick their participants. Pre-existing condition? No policy for you! Over 50? Gonna cost you, big time, pal! Wait! You're female?! Omigod, that right there is a whole different can o' worms, ain't it? Then along comes this bill, and it says they cannot refuse to insure anyone, for any reason. BIG shift in their paradigm! While they were pleased at the prospect of millions of new customers, they were not at all happy with the risks presented by many of them. These companies had a great deal of experience, and had fixed, time-proven formulas & what not, for setting their premium rates- but only when they had control over who they would cover. The new bill would be moving them into uncharted territory. Now, people can apply for a policy AFTER their Cancer diagnosis, and they CAN'T be turned away! Uncertainty ... BAD!

But the Government obviously needed some cooperation from the insurers to make this plan work. What happens to us, asked the insurers, if we have a bad year in a given region, and find that we've had to pay out more in the benefits mandated by this act than we've collected in premiums? The solution was what I mentioned in the introduction while discussing my sole personal connection to the insurance industry, via my high-school buddy (aside from being a policyholder, of course) - a re-insurance pool. This was also to be a TEMPORARY feature of the ACA, originally set to expire in 2016, by which point it was assumed that the insurers would have had enough experience, and collected enough data, to know how to set their premium rates under the new paradigm.

The deal was structured along these lines ... for a given region or exchange, all participating insurers who MADE MONEY in a given year would kick a percentage of their profits into a re-insurance pool, from which any insurers who LOST MONEY during that same year could recoup their losses. The pool was funded by the profitable insurers and administered by the Federal Government. The ACA set a target ratio of benefit payouts to premium collections of 80% (i. e., 80¢ of every premium dollar collected should be returned to policyholders in the form of health care payments.) Any company that found their benefit/premium ratio at 77% or below (i. e., collected 3% or more above the 80% target in premiums than they paid out in medical expenses) would pay into the pool. If your benefit/premium ratio was 83% or more, then you could collect from the pool. I do not think it’s an exaggeration to state that this single feature of the plan was what convinced most insurers that eventually chose to enter the exchanges that they would not lose their collective shirts by doing so. The name given to a given exchange’s re-insurance pool was the "RISK CORRIDOR." It was truly a major, but largely unknown (think, now - have you EVER heard those two words spoken next to each other on the TV? I'm pretty sure I haven't!) and deeply under-appreciated, feature of the ACA. This explanation is, of course, greatly simplified. Those with a technical interest in the subject can get a MUCH more detailed explanation here.

So, as originally passed, the ACA included these risk corridors, in addition to the mandated expansion of Medicaid. The expanded Medicaid coverage would keep the poorest Americans OUT of the exchanges, and combined with the risk corridors, were expected to keep premiums on the exchange low. THOSE WERE THE PROVISIONS OF THE PLAN AS ORIGINALLY PASSED BY THE 111TH CONGRESS AND SIGNED INTO LAW BY PRESIDENT OBAMA, on 3/23/2010.

The first major blow to the program, which we all know about, was struck by the Supreme Court, which ruled on 6/28/2012 that individual states would NOT be required to implement the Medicaid expansion. As a result, most Red States chose not to do so. That decision put their least wealthy citizens, who were likely to find ANY any additional monthly expense was too tough a nut to crack, into the exchanges, where the original plan did not anticipate them. The increasing number of poorer applicants caused a downward pressure on premiums. And that downward pressure set them up for the clandestine death blow. All it would take was one unscrupulous legislator to come along and upset the entire apple-cart.

Enter "Little Marco". In December of 2014, Rubio inserted the poison pill that would neuter the effectiveness of the risk corridor program into a must-pass budget reconciliation bill. Budget reconciliation is the same strategery that Paul Ryan has been hoping to use to get his Trump-Care initiative bulled through, as such legislation is filibuster-proof. Rubio’s amendment placed a hard limit on risk corridor payments, thus restoring the risk to insurers that the risk corridor policy was designed to mitigate. More than anything else, it was this single act that caused insurers to "flee the exchanges", especially in those states that did not expand Medicaid.

As a matter of fact, Rubio bragged about this action of his during the Republican Presidential debates, calling risk corridors a "bailout fund" for the insurers.

So when you hear that "Obamacare is on life support, and we're pulling the plug," remember that it was Republican partisanship that put it there. If the Medicaid expansion were implemented nationwide, and the risk corridors weren't crippled, it's likely that, as President Obama initially stated, you WOULD HAVE been able to "keep your current policies."

http://www.dailykos.com/story/2017/3/23/1646512/-Risk-Corridors-or-How-Marco-Rubio-Broke-Obamacare