Yesterday, the General Counsel of the U.S. Government Accountability Office (GAO) supported the requirement that the Administration needs appropriations to bail out insurers who lose money in Obamacare exchanges in 2015, via risk corridors:
HHS stated that it intends to begin collections and payments under section 1342 in FY 2015. However, as discussed above, for funds to be available for this purpose in FY 2015, the CMS PM appropriation for FY 2015 must include language similar to the language included in the CMS PM appropriation for FY 2014.
This is a very positive development towards protecting taxpayers’ from the unlimited liability to which Obamacare exposes us by protecting insurers’ income statements from losses in Obamacare exchanges. The Administration had assured us that the risk corridors would be budget neutral, but that was not written into the law.
However, the GAO also recognizes that the current Program Management (PM) appropriation collects “user fees” from insurers, and that “such sums as may be collected from authorized user fees … shall be credited to this account and remain available until September 30, 2019.” So, successfully limiting the bailout will require that Congress writes a very precise Continuing Resolution for the next PM appropriation.
This is a topic on which NCPA has had significant influence. On June 18, I testified in person at a hearing of the House Committee on Oversight and Government Reform. NCPA recently published my testimony as an Issue Brief, Risky Business: Will Taxpayers Bail Out Health Insurers?