Dems fear they made a mistake passing ObamaCare provision

Democrats are looking back with regret on a provision that was slipped into a funding bill two years ago, arguing that it is contributing to the insurer problems plaguing ObamaCare.

In hindsight, some Democrats say they should have fought harder against the Republican provision, which limits funding for insurers under a program called risk corridors.

{mosads}“I felt like this could have been stopped and it wasn’t,” said a Democrat involved in the 2014 negotiations.

“At the time there were Appropriations staff on the Democratic side who did not fully understand what they were doing,” the source added.

The risk corridor program was designed to provide financial stability for insurers in the early years of the healthcare law by taking money from insurers faring better financially and giving it to the insurers faring worse.

But in the first year, the program took in nowhere near enough money to cover the payouts. Then the provision put into the 2014 law, which Republicans said was needed to prevent an insurer “bailout,” prevented the administration from shifting funds from other areas to make up the difference.

The result was that insurers received just 12.6 percent of the payments they were owed for 2014, a roughly $2.5 billion shortfall. That left a gaping hole in insurer finances on top of the other problems they were already facing, like a sicker group of enrollees than expected.

Some Democrats say their party made a major miscalculation by allowing the risk corridors program to be restricted.

“There were unrelenting attacks by Republicans to stop the [Affordable Care Act] from working, and on the other hand, ineffective Democratic defense, especially relative to the risk corridor funding,” said former Democratic Rep. Earl Pomeroy (N.D.).

Pomeroy, now a lobbyist at Alston and Bird whose clients include Aetna, said the shortfall in payments would force insurers to make up the difference with higher premiums.

A Democratic aide on the Appropriations Committee rejected criticism of the 2014 funding measure and said that the real issue was that the healthcare law as drafted did not identify the source of funding for the risk corridor program.

Even without the provision in question, the aide said, there would not have been enough funds to cover the $2.5 billion shortfall. The funds would have had to come from a $4 billion Medicare and Medicaid account, and such a big cut would have been devastating to those programs.

“The problem originated with authorizers neglecting to fund this specific section of ACA,” the aide said. “Resorting to discretionary appropriations to absorb a new $2.5B ACA expense in a Republican Congress was never a realistic or viable path.”  

There was also a split within the Department of Health and Human Services (HHS) in 2014 over whether to be concerned about the Republican provision.

The Centers for Medicare and Medicaid Services (CMS) cautioned against accepting it, said the Democratic source involved at the time, but the HHS assistant secretary for financial resources took a different view.

The assistant secretary’s office ultimately signed off on the provision under the assumption that there would not be a shortfall in the program to begin with; if a shortfall appeared, the thinking went, officials could work around it by shifting funds from other areas.

That turned out to not be the case.

Rep. Jim McDermott (Wash.), the top Democrat on the Ways and Means health subcommittee, blamed Republicans for the provision making it into law but acknowledged that it is “undercutting the ACA.”

“The president could have vetoed it, but it was buried in other things,” he said, noting that the language was part of a massive government funding bill. “That’s one of the problems, when you get these bills and they’ve got 20 provisions and 18 are OK. So that’s how they got through it.”

Former Rep. Jack Kingston (R-Ga.), who in 2014 was chairman of the Appropriations health subcommittee, said the issue’s low profile helped Republicans protect taxpayers by turning the provision into law.

“It’s an issue most people were not paying attention to, and we studied the bill and we felt like there was a vulnerability,” Kingston said. It wasn’t until Sen. Marco Rubio (R-Fla.) touted the provision in his presidential campaign that most people heard about it, he noted.  

Among the few Democrats who were knowledgeable about the issue, Kingston thought there was a fear of speaking out and being seen as defending insurance companies.

“The lead up to ObamaCare was ‘the insurance companies are out to screw you,’ so they’re approval rating was probably slightly higher than ours but not much,” Kingston said.

Indeed, in December 2015, when insurers and some Democrats made an unsuccessful push to strip the risk corridors provision out of the new spending bill for the next year, Rep. Rosa DeLauro (Conn.), the top Democrat on the Appropriations health subcommittee, said she would be “happy” to keep the language.

“I don’t carry a brief for the insurance companies,” she said. “They do pretty well.”

With several large insurance companies pulling back from ObamaCare in recent months, some conservatives are warning that the Obama administration could seek to find a way to get around the provision and get money to insurers anyway.

Several insurers have sued the administration, saying they are owed the full amount of the payments. On Friday afternoon last week, the administration put out a notice saying it is open to settling the claims.

“We are willing to begin such discussions at any time,” the CMS said in the notice.

Chris Jacobs, a conservative policy analyst and former Republican congressional staffer, wrote in National Review on Monday that the notice could be the first step to getting around the 2014 provision.   

“Insurers — you want a bailout?” Jacobs wrote, giving a “translation” of the CMS notice. “Come right in and let’s chat. After all, we’re here only until January 20.”