Large insurance companies are now in a tiff with the GOP over a provision in the year-end spending bill which restricts the Obama administration from bailing out Obamacare insurers if necessary.
The $1 trillion end-of-year spending bill funds almost all Obamacare provisions, a seeming defeat that many on the right are decrying. (RELATED: Conservative Opposition Unites Against $1 Trillion Spending Deal)
The legislation cuts just $10 million from future funding for the Independent Payment Advisory Board, which will advise on cuts to Medicare spending but hasn’t yet been assembled. But it also prevents the administration from using taxpayer funding to pay insurance companies until Obamacare’s risk corridor program.
The provision encourages insurance companies to join Obamacare exchanges by collecting funds from all participating companies and redistributing them to the insurers which have the sickest, costliest Obamacare patients (restricted to companies with losses over a certain percentage).
Early this year, however, the insurance lobby, concerned about Obamacare insurers suffering losses on the exchange that surpassed the available fees, managed to wrangle a rule out of the Obama administration which would have allowed the Centers for Medicare and Medicaid Services to hand out taxpayer money to insurers if the exchanges didn’t turn out profitable for anyone. (RELATED: Obama Admin Rule Opens Door To Insurance Company Bailout)
That move, deemed an “insurer bailout” by many on the right, is restricted under the new spending bill, but not entirely avoided — the legislation does not mandate that the risk corridor program remain entirely budget-neutral and doesn’t stop CMS from paying insurers with user fees form other programs.
Insurance companies aren’t happy with the result. America’s Health Insurance Plans, an industry trade group, warned that the changes will result in even more premium hikes for Obamacare plans.
“American budgets are already strained by healthcare costs, and this change will lead to higher premiums for consumers and make it more difficult to achieve affordability,” AHIP spokeswoman Clare Krusing said in a statement, according to The Hill. “Our focus should be on changes to the law that will lower costs — like repealing the health insurance tax — not those that drive premiums higher.”
According to AHIP, if insurers can’t access taxpayer funding to offset higher costs from customers with more pre-existing conditions and built-up demand for health care, they’ll likely have to hike premiums on their customers as a result.
Congress is expected to vote on the bill Thursday.