Risk corridors for me, not for thee

Republican Senator from Florida Marco Rubio on Capitol Hill in Washington,D.C. on January 28, 2014.
Republican Senator from Florida Marco Rubio on Capitol Hill in Washington,D.C. on January 28, 2014.
Photo by Nicholas Kamm/AFP/Getty Images
The Affordable Care Act was signed into law nearly four years ago, much to the chagrin of its conservative critics. And while the right’s list of complaints against “Obamacare” isn’t short, the law’s detractors never much cared – and certainly never talked about – the provision on “risk corridors.”
 
That changed rather suddenly late last year, when Sen. Marco Rubio (R-Fla.) and some of his allies decided the measure constitutes an insurance industry “bailout.” Why did it take four years for ACA critics to discover their concern about an obscure provision that was part of the law all along? No one knows, but it was nevertheless quickly embraced by nearly all of the congressional GOP.
 
Substantively, the charge is oddly nonsensical. As Jon Chait explained, the measure in question “would impose a kind of tax on insurance companies that sign up healthier-than-expected customers, and reimburse the firms that sign up sicker-than-expected customers.” It’s not exactly scandalous. Indeed, it’s not even interesting.
 
And as Reps. Henry Waxman (D-Calif.), Sander Levin (D-Mich.), and George Miller (D-Calif.) explained last night, it’s especially problematic for Republicans who now pretend to find risk corridors outrageous since Republicans helped come up with the idea.
What’s most remarkable about their comments on risk corridors is that Republican leaders are denouncing a model they created to smooth out rate increases in prescription drug coverage under Medicare. When Senate Minority Leader Mitch McConnell voted in 2003 to create Medicare Part D, he called the law “the most important social legislation … in my memory” and said it provided “a genuine opportunity for the private sector to actually compete in offering this new drug benefit.” House Republican Leader John Boehner made similar comments, noting in 2007, “By almost every measure, this drug benefit has exceeded expectations, and it continues to score high marks among seniors for providing big savings on their prescription costs.”
 
An innovative part of the law McConnell and Boehner voted for was its “risk corridors” program, a new idea back in 2003. The corridors are a mechanism to distribute or balance risks across insurance companies, so that those that sign up healthier enrollees help those that attract sicker enrollees. Under the program, if insurers’ actual costs for medical claims are more than 3 percent below their expected costs, they will transmit a portion of their profits into the federal Treasury. Those funds will then be redistributed to insurers whose actual costs exceed their expected costs by more than 3 percent. The provisions were included in Medicare Part D to give the insurers confidence to enter a new market. And they worked.
This leads to a fairly obvious question: if the policy is effective, and the policy was a Republican idea, why are Republicans all of a sudden pretending to be outraged by the measure four years after it became law?
 
The answer isn’t entirely clear – ascribing motives is always tricky business – but Kate Nocera noted last night that GOP lawmakers “see a political winner in their latest push to repeal the ‘risk corridor’ provision of Obamacare,” even if it’s a sound idea, even if Republicans came up with it, and even if the policy itself is scheduled to disappear entirely in 2016.
 
By all appearance, what we’re witnessing is the latest example of post-policy nihilism. Policymakers who know better are shouting, “Bailout!” not because it’s true, but because it’s a potent word some voters (and donors) might find believable.
 
And in politics, what “matters politically” isn’t what true, but rather, how the truth can be manipulated “in attack ads,” right?
 

Affordable Care Act, Health Care Policy and Obamacare

Risk corridors for me, not for thee