According to Chris Jacobs of America Next:
As insurers submit bids for the 2015 open-enrollment season, media reports have trumpeted increased participation by carriers on several health exchanges. Depending on the legal and judicial interpretations of two important issues, those insurance companies may end up getting much more than they bargained for.
The first issue involves the temporary “risk corridor” provision in ObamaCare, under which plans with enrollees who are healthier than average pay into a pool that subsidizes plans whose enrollees are unhealthier than average.
Does the Obama administration have the authority to implement this provision? A January memo from the Congressional Research Service raises doubts.
But that’s not the only potential pitfall for carriers: They could also end up on the hook for payment reductions caused by sequestration.
And while the premium subsidies are structured in a way that should exempt them from the budget sequester, the cost-sharing subsidies are not.
The bottom line: The nonpartisan Congressional Research Service warned in May 2013 that insurers could be on the hook to absorb the billions of dollars in sequester cuts to the cost-sharing subsidies. As with the “risk corridor” provision of ObamaCare, insurers participating under the assumption that these legal questions will be easily resolved may be doing so at their own risk.