Friday, December 6, 2013

Obamacare Risk Adjustment: Moving the Goalposts

The Administration has ways of partially immunizing health insurers from losing money in ObamaCare’s exchanges. The Administration is searching for ways to increase this without Congressional approval.

By the end of November, the U.S. Department of Health & Human Services (HHS) released its proposed rule for payment parameters for 2015. However, as well as proposing the parameters for reinsurance, risk adjustment, and risk corridors for the second year of the ObamaCare exchanges, the proposed rule sketched out some of the adjustments it plans to make to the previously finalized rule for 2014.

HHS asserts that it lowered the attachment point because there will be fewer extraordinary claims than originally anticipated: “…Updated information, including the actual premiums for reinsurance-eligible plans, as well as recent policy changes,  suggest that our prior estimates of the payment parameters may overestimate the total covered claims costs of individuals enrolled in reinsurance-eligible plans in 2014″ (italics mine).

This is a remarkable claim: I do not believe that any public expert who has been observing enrollment in the ObamaCare exchanges since October 1 has come to this conclusion. Quite the contrary, we believe that the exchanges are attracting older and sicker applicants than originally anticipated.

Read the entire article at the Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

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