What Insurer Bailout?

Chait demolishes a GOP talking point:

The risk corridor program could end up paying more than it takes in, in which case it will wind up subsidizing insurers. Conservatives have assumed as a simple given that the risk corridors will pay out more than they take in.

[Yesterday’s] CBO report predicts just the opposite: that insurance companies will be paid $8 billion, but will pay back $16 billion. The risk corridor program is therefore predicted to result in a net expenditure of negative $8 billion. Repealing risk corridors would increase the projected deficit. If we accept the spurious equation of a subsidy with a bailout, then the Republican plan to repeal risk corridors would be a bailout, and the risk corridors would be the opposite of a bailout.

Edwin Park warns that repealing “the risk corridors would result in higher premiums”:

 [Insurers] aren’t sure who will ultimately enroll in the marketplaces and their need for health care.  As a result, without the risk corridors (and other risk-mitigation tools) insurers would have to charge higher premiums in 2015 and 2016 to offset the risk of this uncertainty, making coverage less affordable.  Some insurers may opt to not participate in the marketplaces at all.

Earlier Dish on the risk corridors here and here.