U.S. senator urges budget neutrality on Obamacare risk provisions

WASHINGTON Wed Apr 2, 2014 9:36am EDT

U.S. Senator Marco Rubio (R-FL) is interviewed at the Reuters Health Summit 2014 in Washington April 1, 2014. REUTERS/Gary Cameron

U.S. Senator Marco Rubio (R-FL) is interviewed at the Reuters Health Summit 2014 in Washington April 1, 2014.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - U.S. Senator Marco Rubio, a prominent Republican critic of President Barack Obama's healthcare law, unveiled legislation on Tuesday to make sure Obamacare would not add to the deficit by compensating insurance companies for possible losses.

The 2010 healthcare law includes provisions to safeguard insurers against losses if they saw unexpectedly high enrollments of sick or older people, who are costlier to insure than young, healthy consumers.

The Florida senator has labeled the provisions a "bailout" for insurance companies.

Rubio's two-page bill, dubbed "the ObamaCare Taxpayer Bailout Protection Act," requires the administration to ensure that the law's risk provisions "reduce to zero the cost ... to the federal government."

"The White House has said ... it will have to be budget neutral, that no money from taxpayers or general revenue will be spent in bailing out the exchanges. And all I'm offering now is a bill that will say: 'Let's codify what you've already agreed to do,'" Rubio said at the Reuters Health Summit in Washington.

Rubio, seen as a possible White House contender for 2016, proposed repealing the little-known risk-corridor provisions in legislation he introduced last year.

Insurers oppose repeal of the provisions, saying they were put in place to protect the companies against marketplace uncertainties during the first few years of Obamacare's rollout.

The nonpartisan Congressional Budget Office predicted the provisions would create a net gain of $8 billion for the budget over the program's three-year life. That is because some companies that have lower-than-expected costs would be required to share their windfall with the federal government.

Cigna Corp (CI.N) Chief Executive David Cordani told the Reuters Health Summit he agreed with the idea that the markets needed to be self-sustaining without artificial financial supports. But he said risk corridors were designed to be market neutral and priced into the products that Cigna and other insurers are already offering on the Obamacare marketplaces this year.

"It's a fundamental part of the design of the law," Cordani said. He said Cigna would not favor risk mitigation programs that add to tax-funded subsidies.

But others said it was not clear how useful risk mitigation would prove to be for insurers.

"They're super-complicated. Very few people understand exactly how they work. They've never been tried on this scale before," Chet Burrell, chief executive of CareFirst BlueCross BlueShield, told the Reuters Health Summit. "How's it all going to come out? I don't think anybody on earth can say."

(Reporting by David Morgan; Editing by Caren Bohan and Peter Cooney)

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Comments (2)
Dahuzi wrote:
What I don’t understand is why my $72,000 hospital stay cost so much. The insurance company paid a negotiated rate of only $7,600 including the hospital and doctors. My insurance EOB (explanation of benefits) showed a $65,000 discount. I think if we all paid this rate, a lot less of us would actually need insurance. But when I look closer, it gets even more concerning.

I paid $742 a month which is 8,904 annually if I did the math right. That’s a $1,300 profit for doing nothing but holding my money. Years before, I paid about the same amount maybe a little less and they paid nothing out but a few visits and a blood test. That’s a huge profit then.

I think we all need to rethink if we really need a company or government wedged in between us and our medical care provider.

So I am thinking this is the government jumping on an insurance cash cow for part of the action. Am I wrong?

Apr 01, 2014 9:25pm EDT  --  Report as abuse
SunnyDaySam wrote:
Rubio and the rest of the GOP have been working and hoping for failure of the ACA ever since Obama was elected the first time. They’ve done nothing but 50 failed votes against it. The GOP has done NOTHING for the Average American. They have no credibility at all.

Apr 02, 2014 8:13pm EDT  --  Report as abuse
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