A few weeks ago, we were told not to listen to the hype about Obamacare’s troubles, because insurers believed it was all going to be okay. Better yet, even after a rocky start in 2014, it was going to be good for their businesses. And indeed, it is likely that the reason they agreed to let the federal government tell them what they can sell or not and at what price is that they thought this was worth it in exchange for Obamacare’s forcing citizens to buy their products.
But what will this bargain take? One large health insurer, Humana, is going to need between $250 and $450 million payment (some
or most of it could be coming from taxpayers) to compensate for their loses in 2014. AEI’s Dr. Scott Gottlieb writes the following this morning:
Humana announced that it expects to tap the three risk adjustment mechanisms in ObamaCare for between $250 and $450 million in 2014. This amounts to about 25 percent of the insurer’s expected exchange revenue. This money is needed to offset losses that the insurer will take as a result of slower enrollment in its ObamaCare plans, and a skewed risk pool that weighs more heavily toward older and less healthy members than it originally budgeted.
More than half of the money will come from the $25 billion reinsurance pool that ObamaCare provides (collected through a tax on employer-sponsored health plans). The other half will come mostly from the risk corridors. Humana is expected to book the money as revenue to offset shortfalls between what it collects in exchange premiums and pays out in medical claims.