Vice President for Health Policy
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 Rubio letter also fails to mention that repealing or blocking the risk corridor program would result in higher premiums for marketplace plans. That’s because the program helps keep premiums affordable by reducing uncertainty for insurers.
Health reform’s major reforms to the poorly functioning individual insurance market (like prohibiting insurers from charging higher premiums to people in poorer health or excluding them entirely) and the launch of its new marketplaces have temporarily raised insurers’ uncertainty in pricing their premiums during the marketplaces’ first few years. If Congress blocked the risk corridors, insurers would have to build a bigger “risk premium” into their premiums for 2016, making coverage less affordable. (Insurers have already finalized their 2015 rates.) And some insurers might decide not to participate in the marketplaces in 2016.
If Congress enacts legislation denying the Administration the authority to make risk corridor payments, that would be virtually certain to drive up the cost of health insurance provided through the marketplaces.