Republicans Support “Risk Corridors” — Just Not In Obamacare

The GOP derides a provision of Obamacare as an “insurance company bailout,” but some in the party don’t have a problem with the policy on its own and have used them before. “Risk corridors in and of themselves are solid in concept and have been an important part of other laws,” Rep. Tim Griffin. posted on

Associated Press

WASHINGTON— Congressional Republicans see a political winner in their latest push to repeal the “risk corridor” provision of Obamacare, dubbed the “insurance company bailout” by opponents of the law.

But those in the GOP who support repeal of the risk corridors say they do not have a problem with the idea of risk corridors on its face but only as it relates to the president’s health care law.

Risk corridors were a part of 2006’s Medicare prescription drug overhaul (known as Part D) without controversy, as a way to draw insurance companies into a new marketplace. The corridors essentially provide financial assurances to companies to cover some losses should an insurance company take on a riskier, sicker pool of customers for plans sold on the exchanges.

The provision in Obamacare went relatively unnoticed for years, and is set to sunset in 2016. But the risk corridors took on a new life when Senate and House bills were introduced to repeal the provision. The House GOP has also floated tying repeal of risk corridors to a debt ceiling increase. Insurance companies are taking the threat seriously enough that they are intensifying the lobbying outreach on Capitol Hill and warning members repeal of risk corridors could “lead to a single-payer system.”

Sen. Marco Rubio, the lead Senate cosponsor of the repeal bill, said he isn’t against the idea of risk corridors — but not for Obamacare.

“The concept [of risk corridors] is a valid insurance concept but it requires companies to be able to make a profit—it requires enough companies making a profit in exchange for a handful of companies that may miscalculate and have some losses that way you have a net positive,” Rubio said.

“You can see in the people signing up, the numbers of people signing up, they are not getting the sort of risk profile they need to make these programs work… creating an extraordinary liability for the taxpayer,” Rubio added.

Rep. Tim Griffin, who sponsors the House bill, similarly said that risk corridors on their own were not bad policy, only in the context of the president’s health care law.

“Risk corridors in and of themselves are solid in concept and have been an important part of other laws. What’s the difference here? Well, the difference here is a risk corridor assumes that you have a functioning market, and it’s not a bailout,” he
said. “Risk corridors were not made for [a bailout], they were made for balancing out a market where some companies were ok and others weren’t, they weren’t made to bailout a systemic failure of an industry.”

Both Griffin and Rubio brushed off news from Congressional Budget Office out on Tuesday that risk corridor repeal would lead to an increase in the deficit and keeping the provision will actually save the government about $8 billion. That analysis relied heavily on what happened in Medicare Part D, which Rubio argued was not a fair comparison.

“The Medicare Part D program was not operating under the same situation that these companies are operating under,” Rubio said.

But Democrats charge that they were merely replicating a Republican idea.

“Democrats simply copied what the Republicans had done — including the same risk corridors program that Republicans had invented in Medicare Part D,” read a memo from minority leader Nancy Pelosi’s office. “Actually, the risk corridors program in the ACA is a more conservative version of the program than the one in Medicare Part D — being both of shorter duration and less generous than the risk corridors in Medicare Part D.”

Support for the repeal of the risk corridors has been strong among a number of conservative commentators, including Charles Krauthammer, who made no bones about what repeal of the risk corridor would mean for the health care law.

“Without viable insurance companies doing the work, it falls apart. No bailout, no Obamacare,” he wrote.

But others are warning Republicans that if premiums skyrocket from a repeal of the risk corridors, the GOP will end up taking the brunt of the blame.

“Some conservatives say that a vote by the House would be safe because the legislation never would be taken up by the Senate or signed by the president. But I’m not so sure,” wrote Grace-Marie Turner, president of the Galen Institute. “The Democrats and especially the president would like nothing more than to have someone else to blame for at least some of the failures of Obamacare. If Republicans initiate this legislation, then the White House could blame them for the higher health insurance premiums that would result.”

Some Republicans BuzzFeed spoke with conceded that they were less clear on the policy implications of repealing risk corridors but understood it could be a winning message.

“We’re looking into it. I can’t answer your question but I know we did something similar in Part D,” said Rep. Joe Pitts. “We want to make sure when we deal with it we don’t do damage. But when you talk about taxpayer bailouts, it sets people on fire.”

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