Talking Points: Eliminating ACA’s Risk Corridor and Reinsurance Programs Undermines Private Insurance Market

The “ObamaCare Bailout Prevention Act,” which would eliminate the ACA’s risk corridor and reinsurance programs, would have a devastating impact on the private insurance market. To build support for the proposal, supporters are calling the ACA’s risk corridor and reinsurance provisions “a massive taxpayer bailout” to compensate insurance companies who participate in “ObamaCare.” This is simply not the case. Just like when the competitive, private prescription drug program was launched in Medicare, these programs are critical to maintaining a private insurance market that covers everyone regardless of pre-existing conditions. In fact, the ACA’s risk corridor program is modeled exactly after the GOP program that was successfully used in Medicare Part D passed by a Republican Congress and signed into law by a Republican President. Eliminating these programs will result in massive premium increases and could cause private insurers to become insolvent. [Use with appropriate audiences only.] It is very misleading to characterize the program as a bailout of insurance companies. For example, the risk corridor program not only protects insurance companies from losses, it also requires insurers to pay the government if they make too much money. In the not-so-long run, eliminating risk corridors and reinsurance doesn’t just lead to the failure of the ACA. It jeopardizes the entire private health insurance market and will ultimately lead to a single-payer system. Furthermore, it will close the door to pro-competitive health care reform alternatives. Whatever one’s position during the debate over the ACA, insurance companies are now required to comply with the law. Risk corridors and reinsurance are key to making the insurance reforms work while preserving the private insurance market.

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