A group of Republican lawmakers on Tuesday obtained a legal opinion on legislative instructions for funding a key factor enticing health insurance participation in the state and federal exchanges. Exchange health plans can be obtained without restrictions due to preexisting health conditions and eliminating insurance limitations on preexisting conditions is a primary objective of the Affordable Care Act.
However, to avoid a catastrophic insurance market breakdown, the law instituted an individual coverage mandate, which broadens the coverage pool. Also, the law added a temporary premium stabilization program for insurers to re-balance the coverage risk. The federal government subsidizes plans that have losses above a set amount and recovers money from plans that have gains.
CQ Health Beat’s (@CQHealthTweet) Rebecca Adams reported that the Centers for Medicare and Medicaid Services, in insurance exchange rules issued in May, tweaked the amounts this year given to insurers to cover losses and offset the cost of caring for high-cost patients. CMS expects the insurer subsidies and recouped payments to offset each other, but the final rule text notes:
In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers. In that event, HHS will use other sources of funding for the risk corridors payments, subject to the availability of appropriations.
On Tuesday, the Government Accountability Office provided Alabama Sen. Jeff Sessions and Michigan Rep. Fred Upton with an opinion noting that legislation covering fiscal year 2015 spending, which begins today and is funded through a stopgap spending resolution through Dec. 11, should also include special funding instructions for risk payments.