by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Obamacare insurers have been struggling with a shortfall of federal funds, which could lead to higher premiums for Obamacare plans, experts said.
The Affordable Care Act set up a risk corridor program to help insurers that take on too many sickened or older Americans. The law requires insurers to accept every applicant regardless of health status or pre-existing condition.
The program works by having insurers whose profits reach past a certain threshold paying into it, and the administration paying out to insurers that have big losses.
Obamacare insurers requested about $2.9 billion in risk corridor payments for the 2014 calendar year, but they only received $362 million, a mere 12 percent of what they asked for. The shortfall happened because insurers requested more than what was paid into the program.
The result has been devastating for some insurers. WinHealth, which provides coverage in Wyoming, went into receivership last week because of a low risk corridor payment.
It will suspend insurance sales in 2016, leaving about 8,200 residents to search for a new plan from the sole remaining insurer in the Obamacare marketplace.
In addition, nine taxpayer-funded insurance co-ops have closed recently, with some blaming the low payments.