Last month, I had the privilege of testifying in person at a hearing of the House Oversight Committee on Obamacare’s risk corridors, an unlimited taxpayer liability that protects health insurers’ profits in Obamacare’s health insurance exchanges. The Administration has suggested that the risk-corridor payments will be budget neutral, a claim which I and others find unconvincing. I advised that budget neutrality of risk-corridor payments can be insured by amending Obamacare to make budget neutrality statutory.
The Committee has investigated the Administration’s claims of budget neutrality further, and found that they are bunk. In a recently released staff report, the Committee noted that:
At least one insurance company appealed directly to Valerie Jarrett, Senior Advisor to President Obama and Assistant to the President for Public Engagement and Intergovernmental Affairs, after the Administration signaled its intent in March 2014 to implement the Risk Corridor program in a budget neutral manner. Chet Burrell, the President and CEO of Care First Blue Cross Blue Shield, wrote to Ms. Jarrett that insurers would likely require Risk Corridor payments on net and that budget neutrality would lead insurers “to increase rates substantially (i.e., as much as 20% or more…)”