Wednesday, February 05, 2014

About those Obamacare risk corridors

The one bright note in the CBO report on Obamacare is that there might not be a bailout of insurance companies because the "risk corridors" which are partially funded by the insurance companies may not need government assistance.  As this Hit and Run article notes, the CBO is basing this estimation on what happened with Medicare Part D:
What CBO is saying, then, is that if Medicare Part D’s experience with risk corridors is any indication, the government will ultimately be paid more from the program than it pays out.
The difference is that the insurance companies were pretty sure who were going to sign up for the Prescription Drug benefit and in what numbers.  For Obamacare, there is much less certainty:
Is that what we should expect from insurers selling plans through Obamacare? With Huamana [sic] saying in an SEC filing that the demographic mix in its exchange plans is “more adverse” than expected, Cigna’s CEO warning that his company might take a loss on the exchange plans, and Aetna’s CEO bringing up the possibility that the company might eventually pull out of the exchanges? The gloomy financial outlook for exchange plans is an industry-wide phenomenon. When Moody’s cut its outlook for health insurers from stable to negative to negative last month, it cited “uncertainty over the demographics of those enrolling in individual products through the exchanges” as a “key factor.”
Given that virtually every promise made about Obamacare has proven false, why would we now believe that we're going to pull a profit on this scheme?  C'mon man, that's Twilight Zone.

2 comments:

Henry Bemis said...

Given that virtually every promise made about Obamacare has proven false, why would we now believe that we're going to pull a profit on this scheme? C'mon man, that's Twilight Zone.

It's a cookbook! Obamacare is a cookbook!

Eric said...

As a longtime TZ fan, I'm giving you +1 point for the cookbook but +100 for "Henry Bemis."

Nice.