Sen. Cory Gardner (R-CO) has been talking up Colorado’s new reinsurance plan, which is expected to lower health insurance premiums for individuals next year by almost a fifth.
He’s also been taking credit for getting federal Centers for Medicaid and Medicare Services to approve the program, saying in a press release in July he weighed in “a number of times” to get permission.
But Gardner’s trumpeting of the program is causing eye-rolling by national healthcare experts.
That’s because Gardner was a major player in killing a similar provision of the Affordable Care Act that aimed to do the same thing as Colorado’s program, deriding it as taxpayer “bailouts” of insurance companies.
And, according to a study by economists at the National Bureau of Economic Research, ending the provision, called risk corridors, played a large part in insurance prices going up in the first place.
In fact, if not for the measures Gardner supported, the study found that premiums would have gone up by 10 percent in 2017 instead of 37 percent.
“It’s like pulling a fire alarm after setting the fire,” said Leslie Dach, a former senior counselor to the Secretary of Health and Human Services in the Obama administration and chairman of Protect Our Care, an advocacy group fighting attempts to repeal the ACA.
It gets pretty wonky, but under the state’s new reinsurance plan, Colorado would spend about $250 million in state and federal funds to reimburse insurers part of the cost of covering people with large medical costs.
The idea is that insurance companies would not have to pass on those costs to others, allowing them to lower premiums for everybody by an estimated 20 percent next year.
The program “will allow us to drive down insurance costs, provide better care across the state of Colorado,” Gardner said in the July release.
One problem with Gardner wanting credit now is that he helped kill a similar program, called risk corridors, that was in the Affordable Care Act, said Stan Dorn, director of the National Center for Coverage Innovation at Families USA, a Washington D.C. health policy group supportive of the Affordable Care Act.
Like Colorado’s program, the risk corridor provision tried to deal with one of the healthcare reform’s main issues. Forbidding insurance companies from rejecting people with pre-existing conditions meant insurance companies would have to pay out more claims.
When the new law began, insurers were also unsure how high to set premiums because they didn’t know how much of the additional cost of covering people with existing medical problems would be offset by the additional healthy people who’d be required by Obamacare to start buying insurance.
So to prevent large spikes in premiums as the law got off the ground, the ACA required insurers that made money between 2014 and 2016 to pay fees that would go to the insurers who lost money.
Gardner, though, thought taxpayers could end up being on the hook for making the payments. And indeed, the federal Centers of Medicare and Medicaid Services said money-losing insurers were due $2.87 billion in 2014, while the program only collected $362 million in fees, or just 12.6 percent of the amount due, from the fees. CMS said it planned to pay the pay the backlog from the following year’s fees, but conceded that eventually it might have to ask Congress for money.
In 2013, then a Congressman, Gardner sponsored the House version of Florida Republican Senator Marco Rubio’s bill to eliminate the risk corridor provision.
It didn’t pass. But in 2014 and 2015, Congress, with Gardner’s support, passed as part of its budget a ban on using money other than the fees to pay insurers losing money.
As a result, the insurers never got their money. They sued the government and lost.
But removing the part of the Obamacare intended to shield insurers from taking huge losses had an own impact, according to the study by the non-profit, non-partisan National Bureau of Economic Research.
It found that backing out of helping insurance companies absorb their losses led them to raise premiuims more. It was responsible for 86 percent of the rise in premiums between 2015 and 2017. Had it been funded, premiums would have risen by only 10 percent instead of by 37 percent, the study found.
It’s like intentionally running over somebody with a car and then wanting to be thought of as a good person for sending flowers to the hospital, said Dorn.
Though Gardner had opposed the use of public dollars to shield insurance companies, the state program also taps into the state’s general fund to subsidize insurers, Dach noted. Gardner’s spokeswoman wouldn’t explain the contradiction.
Dach said there’s another problem with Gardner wanting credit for the state program. It relies on $163 million in federal funds from the Affordable Care Act.
But Gardner wants to repeal the law.