Friday, March 21, 2014

Obamacare's Risk Corridor Bailout Just Got Bigger - Much Bigger

Last Friday, the Obama administration quietly released 280 pages of rules that, among other things, increases Obamacare’s risk corridors (a.k.a. insurers’ "bailout"):

An example reveals how much this change increases the “bailout.” Say an insurance plan with $10 million cost target versus $11 million of allowable costs. Actual medical claims are $8.8 million. Using the formula for calculating its payout from the risk corridor, allowing 20 percent of administrative costs, the plan gets a $410,000 “bailout”. If it can add administrative costs up to 22 percent of allowable costs, the payout increases to $635,641 — an increase of 55 percent.

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

No comments: