off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Attack on “Risk Corridor” Program Falls Apart
Congressional Republicans this fall may seek to repeal or block health reform’s temporary “risk corridor” program, designed to help cover any higher-than-expected costs for insurers that offer plans in the new marketplaces while sharing in the savings if costs are lower than expected. They’ll likely make misleading claims about the risk corridors like those from Senator Marco Rubio and other Senate Republicans in a recent letter to House Speaker John Boehner. These attacks simply don’t hold up under scrutiny. Contrary to the Rubio letter:
- The Administration has full authority to make risk corridor payments. The Rubio letter, citing a Government Accountability Office (GAO) legal opinion, claims that the Administration would violate the Constitution if it makes any risk corridor payments to insurers because it lacks the authority to do so. But as we recently noted, the GAO opinion actually says the opposite. Agreeing with the Administration, the GAO finds that the Centers for Medicare and Medicaid Services (CMS), which administers the risk corridors, has the authority to use contributions from insurers with lower-than-expected costs to finance payments to insurers with higher-than-expected costs. In fact, GAO finds that CMS has the authority to use its regular operating funds to finance risk corridor payments as well.
- The risk corridor program will be budget neutral. The Rubio letter says that the risk corridor program will put taxpayers at risk if insurers systematically face higher-than-expected costs, which could cause risk corridor payments to exceed contributions. But the Administration has already issued regulations and guidance ensuring that the program will be budget neutral to the federal government over its three-year existence.
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