Health insurance premiums have risen rapidly in the three years since the launch of ObamaCare’s exchanges, despite the law’s multibillion-dollar efforts to keep a lid on them. ObamaCare created three mechanisms for bailing out insurers if they lost too much money through the exchanges — the so-called risk corridor, risk adjustment and reinsurance programs. The hope was that the prospect of federal cash to cover potential losses would yield lower premiums.
Cash has indeed been flowing from the federal Treasury — but it hasn’t done much good. According to a new report from the Mercatus Center at George Mason University, the Obama administration has given health insurers 40% more in bailout funds under the reinsurance program than originally planned. Yet premiums still rose by as much as 50% in some parts of the country.
Things will only grow worse. Next year, the reinsurance program will end. Insurers will likely respond by hiking premiums even more or withdrawing from the exchanges. Many have already opted for the latter course because of significant losses.
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