Now that 2014 has arrived, the Affordable Care Act is no longer a theoretical proposition, but a policy that is in now being implemented. But, as my colleague Yuval Levin and I explain in a piece in The Weekly Standard, there are still parts of the law that conservatives can and should try to stop from being implemented, both to protect Americans from the worst effects of the wrong-headed law, and to help build the case for its eventual repeal.
Especially troubling is the “risk corridor” provision of the law, under which taxpayers are on the hook for covering large portions of the losses that insurers incur on the Obamacare exchanges. If an insurer pays out claims that exceed 108 percent of its premium collections, taxpayers would cover about 75 percent of its losses.
A mirror-image provision is also supposed to recoup 75 percent of any profits above 108 percent of premium collections. But because Obamacare’s design is so flawed and its rollout has been so bungled, enrollees in the exchange insurance plans are likely to be significantly older and sicker than the insurance company actuaries assumed (there was also a great deal of political pressure on insurers to lowball their premiums in this first year of the program). There will thus likely be few if any insurers rebating profits under this risk-corridor provision, only a large cost to the taxpayer. The insurers are counting on this massive bailout to avoid a bloodbath of losses from Obamacare.
You can read the rest of the article here.