Submitted by Tyler Durden on 05/19/2016 14:48 -0400
In yet another development in the train wreck that is Obamacare, while we know that the legislation is failing individuals and businesses, the government is now failing to live up to its obligations made to the insurers who chose to participate in the healthcare exchanges.
The Affordable Care Act set up what is called a risk-corridor program to entice insurers to participate. Essentially the program limits the risk of loss an insurer can take due to its participation in the healthcare exchange by being reimbursed for part of the loss. The program works the other way as well, meaning that if an insurer profits above a certain threshold, those profits get paid into the program.
In 2014, insurers paid $362 million into the program, however they requested a whopping $2.87 billion in payments to help cover losses. Due to this, the federal Department of Health and Human Services promptly backed out of the agreement it had made with insurers, and decided to announce that insurers would only receive 12.6% of the money they claimed under the risk-corridor program in 2014. Perhaps the bill came due for that $4.4 billion destroyer the Navy decided it needed and the money went to pay for that instead.
It turns out that at least one insurer isn’t going accept that the the government isn’t going to fulfill its end of the bargain. Highmark, the insurance arm of Pittsburgh based nonprofit Highmark Health, is suing the US government for $223 million in back payments owed to it under the risk-corridor program.
“All we’re asking is for the federal government to do what they promised” said Highmark Health CEO David Holmberg.
Highmark Health had a loss of around $85 million last year, on revenue of about $17.7 billion. The losses are largely due in part to its ACA-plan business, and one can see why the company would expect the government to live up to its promises.
This is a textbook example of how Obamacare will not only drive up insurance premiums, drive out small businesses, and leave patients scrambling for medical attention, but it will alsocontinue to drive health insurance companies out of business. That change we could all believe in? That’s the pennies on the dollar that the government is paying out on its own promises,