The fix for the canceled health-insurance plans announced yesterday by President Barack Obama amounts to throwing the insurers under the bus -- “underbusing them,” as a friend calls it.
The administration said that it was going to allow noncompliant plans to continue to be sold, putting the onus on insurers and state insurance regulators to find some way to sell them -- even though there isn’t a lot of time to get the systems reprogrammed and approved by regulators, who aren't all on board, and the customers re-enrolled. Mostly, it’s a political move that allows the White House to duck blame for the cancellations, even if it’s too late to actually reverse them. If the insurers follow through, it could throw off all their actuarial calculations, costing them a bunch of money.
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But it seems that the administration is looking for ways to sweeten the deal for insurers. Politico reports, “Administration officials say they can take care of that problem. They're going to look at ways to adjust special payment mechanisms built into Obamacare, called 'risk corridors,' that pay health plans if they have higher costs than they expected.”
I’ve been skeptical of the argument that the risk corridors will fix things; they’ll mitigate insurer losses if the patient mix is too sick, but they don’t turn losses into profit. It’s a mechanism meant to deal with individual insurers who miscalculate their actuarial risk, not a whole marketplace filled with sicker and older patients than expected.
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