Risk Adjustments in ObamaCare

[AllenChicago]

June 17, 2015

I thought the risk-pools were being phased out? And why do Grandfathered plans pose a higher risk to insurers, if they don't have the same high level of consumer protections as ObamaCare plans do? I thought all plans were seen as equal, for rescue-pool purposes.

"HHS will now pay 100 percent of claims costs between $45,000 and $250,000 — an increase from the previous rate of 80 percent.

HHS has touted the program as a way to keep premiums stable by helping companies avoid extremely high claims cost. It specifically applies to grandfathered plans, which do not have the same protections under ObamaCare."

Story: HHS offers insurers new protections against high claims | TheHill

The number of moving parts in just the insurer bail-out provisions is beyond human comprehension. With HHS spending money like drunken sailors, the next thing you know, a story will emerge describing how Billions of our taxpayer dollars were lost in, and by their system!

 

[somarco]

Any idea where they are getting this money to throw around?

 

[RayNY]

Somarco,

Specifically, with the Risk Adjustment, HHS is going to look at the risk profiles of each plan and "re-allocate" funds from low-risk plans to high risk plans.

AKA, take funds from carriers that look like they'll do well and give it to carriers that don't, regardless of profit figures. This is based on estimated costs, not reality.

This is different than the "Risk Corridor" which looks at MLR and redistributes excess profit to those with losses or insufficient profit, while ignoring risk profiles and expected costs.

There's also the Reinsurance program, which is funded by a fee (paid by consumers, to the carrier, who sends it to the gov't). This is the $63 per person we've heard about.

 

[AllenChicago]

Ray, Thank-you for explaining the "three-R's" so succinctly. The $63 per insured tax is mentioned in the article, so that must be the re-insurance program. Arrogant HHS takes credit for increasing the program from 80% to 100%, but as always, it's our money giving them their power.

 

[somarco]

Very good Ray.

But where does the govt get money to do anything? What product do they produce, what service do they perform and sell to buyers to generate their revenue?

 

[sman]

Very good Ray.

But where does the govt get money to do anything? What product do they produce, what service do they perform and sell to buyers to generate their revenue?

Silly Bob, you know they allow us to work at companies that individuals didn't create or build. Then they allow us to give some of that money back to them to use inefficiently. And to top it off, they also sell notes to individuals and countries and they allow us to pay that interest as well. At least half of us get to do all of this. The unfortunate other half don't get to participate in all of the fun.

 

[RayNY]

You're right Allen, it's the reinsurance program being cited in that article.

While the other two cover estimated losses and real losses, this program covers large claims.

I still find it hilarious that I pay taxes, the gov't pays that to carriers as a subsidy, and the carriers pay it back to the gov't as reinsurance, just so the gov't can re-pay it back to the carriers.

 

[AllenChicago]

Some Health Insurers are about to go over the cliff, due to one of the big Risk Adjustment (aka Bailout) payments coming up severely short this year. After reading this article, I now know WHY those payments came up short.

https://www.conservativereview.com/...macare-bailouts-the-good-the-bad-and-the-ugly

 

[Post Quartermaster]

CROMNIBUS just claimed another Co-Op. Tennessee's CHA went into runoff this morning.....


https://tn.gov/commerce/news/18562

 

[Ann H]

Specifically, with the Risk Adjustment, HHS is going to look at the risk profiles of each plan and "re-allocate" funds from low-risk plans to high risk plans.

AKA, take funds from carriers that look like they'll do well and give it to carriers that don't, regardless of profit figures. This is based on estimated costs, not reality.

This is different than the "Risk Corridor" which looks at MLR and redistributes excess profit to those with losses or insufficient profit, while ignoring risk profiles and expected costs.

There's also the Reinsurance program, which is funded by a fee (paid by consumers, to the carrier, who sends it to the gov't). This is the $63 per person we've heard about.

A Chief Operating Officer of an insurer told me yesterday that the window of profitability in IFP is VERY narrow, much narrower now than ever. That is because now you cannot take on healthy (profitable) people either. If you do, you will pay into the fund, and if your claims suffer you will never recover your money from that fund.

With the MLR taking away profit, and this taking away profit, (not to mention the risk of high claims losses without recourse), the IFP market is almost always going to be a loser for the carrier now.