The Obama administration could give states more power to manage the Affordable Care Act’s risk adjustment program, in a concession to critics who complained that the program unfairly penalized certain companies and threatened to destabilize the exchange system.
The new policy, which was issued late on May 6, encourages state insurance commissioners to seek “local approaches” to easing the impact of the risk adjustment process on small and high-growth health plans. That language appears to open the door to allowing states to artificially limit the amounts that companies might have to pay into the program each year.
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A group of state insurance commissioners is developing a proposal to limit the amount that health insurers might have to pay out under the Affordable Care Act’s risk adjustment program, New Mexico Insurance Superintendent John Franchini told SNL.
The plan would install a so-called circuit breaker to prevent companies from paying more than 2% of their premium revenue into the program each year. That boundary would make insurers’ financial obligations more predictable and avoid the kinds of surprise payouts that contributed to the destabilization of several health plans in 2015.
In late September, the handful of CEOs leading Affordable Care Act-funded consumer operated and oriented plans traveled to Denver in search of answers. The past year had been a difficult one. Their companies were struggling, awash in red ink and facing a mounting list of operational challenges. A few co-ops had already shut down, and regulators were circling several more. The fledgling health insurers needed more support from the Centers for Medicare & Medicaid Services if they were going to survive. Most importantly, they needed a lot more money.