Risk Corridors Adjusted to Bail Out Insurers if Premiums Rise

Posted by:

As insurers begin to file the proposed 2015 public exchange premiums, the Obama administration has freed up more cash to cover shortfalls.  The Affordable Care Act created temporary risk corridors to transfer money among insurance companies on the public exchange.  Those with a greater proportion of costly enrollees will receive extra funds to cover shortfalls.

Due to some states allowing insureds to “keep their plan” to mitigate last year’s mass policy cancellation controversy, many healthy consumers were kept out of the public exchange.  Insurers fear the population on the public exchange is less healthy, and therefore more costly than expected.  Within regulations published in May 2014, HHS said they would “use other sources of funding for the risk corridor payments, subject to the availability of appropriations.”  This allows the administration to use funds appropriated for other programs to make additional payments to insurers.  It is unclear if making more money available to insurers will keep premiums low for 2015, but keeping premiums stable will be essential to bring more consumers to the exchange.

0