A group of Senators Threaten Another Government Shutdown
October 14, 2014
Fourteen senators led by Sen. Marco Rubio of Florida are threatening another government shutdown over a provision in the Affordable Health Care Act designed to keep insurance premiums low. As Congress needs to provide funding for the government before the current short-term funding measure expires Dec. 11, the senators this week wrote to House Speaker John Boehner urging him to prohibit spending on the so-called risk corridor program – insurers’ risk sharing arrangement being used in Medicare Part D.
The senators said they “must protect Congress’ power of the purse” – a familiar reasoning used before they shut down the government last year. Boehner declined to comment whether he would rule out another government shutdown.
What is the risk corridor program the senators are willing to sacrifice hundreds of thousands of federal employees over? The program is part of the health care law designed to keep premiums affordable and attract insurers to participate in the health insurance exchanges. Because insurers are required to cover everyone regardless of his or her health history and because insurers have zero pricing experience in this market, they are more likely to set premiums high, which in turn makes insurance unaffordable.
The risk corridor program helps keep premiums reasonable as it temporarily reimburses insurance plans that cost a lot more than the premiums they receive from subscribers. For claims that cost between 3% and 8% more than the amount insurers receive in premiums, the government will reimburse half of that amount. For claims that cost more than 8%, the government will reimburse 80%.
Likewise, insurers that pay out less in claims than they receive in premiums from subscribers will have to yield some of that money to the government to be used in the risk corridor pool. The risk corridor program is temporary, set to expire in 2017 when insurers should have enough pricing experience.
“This is yet another feature of Obamacare that’s designed to minimize any disruption caused to insurance markets,” said Jon Gruber, the MIT economist who was a key architect of both Romneycare and Obamacare. “The risk corridor is pretty wide, so you have to make a lot of money or lose a lot of money for it to kick in.”
Besides Rubio, senators who signed on to the letter are John Barrasso of Wyoming, Mike Lee of Utah, David Vitter of Louisiana, Ted Cruz of Texas, Michael Enzi of Wyoming, James Inhofe of Oklahoma, Jeff Sessions of Alabama, Deb Fischer of Nebraska, John McCain of Arizona, John Boozman of Arkansas, Pat Roberts of Kansas, Rand Paul of Kentucky, and Tom Coburn of Oklahoma.
