By India Graden
In the context of healthcare and the Affordable Care Act (commonly known as “ObamaCare”), there are certain terms that make the average person’s eyes glaze over and focus immediately wane. Words like “risk corridor” and “reinsurance.” What do they actually mean? With the constant bickering between Democrats and Republicans over the overall efficacy of the program and how to best implement the scheduled changes, it’s hard to read through the language and understand what the government actually wants our citizens to do.
Risk corridors, risk adjustment, and reinsurance are all just words used to describe the government’s plan of lowering the economic impact of insuring the nation. Reinsurance offers funding to insurance companies that deal with high costs for certain enrollees (those who may be considered “higher risk), while risk corridors limit the amount of losses and gains that insurance providers can experience and transfers funds from low risk plans to high risk plans (to even the playing field).
The latest news in the ObamaCare arguments is that House Republicans are saying the often debated risk corridor system is not a big deal – but only because of the overall risk of ObamaCare as a whole. The risk corridor system is set to expire in 2016, however the conversation brings up a much more troubling conversation of what is significant to the national healthcare budget. Why is such a large amount (literally billions of dollars) being spent on a temporary system not deemed as significant?
The answer is because the overall program is so large. The mindset of many House majority members is that the risk corridor payout budget (2 trillion dollars over the next 10 years) is not a problem because the overall ObamaCare strain on tax dollars is already so huge. This mentality is a problem because anything that puts a larger strain on the taxpayer places even more animosity amongst those citizens opposed to ObamaCare in the first place. This loops into a larger discussion on lack of understanding and opposition to public insurance amongst the nation. The first step toward fixing the clear problems with the Affordable Care Act is to make sure the risk corridors and reinsurance programs are actually budget neutral.