For the time being, high-risk and low-income enrollees benefit the most from Obamacare’s exchange plans at the expense of healthy individuals. These high-risk and low-income individuals will also benefit from the law’s risk-adjustment, reinsurance, and risk corridor provisions. If you avidly keep up with Obamacare, you’ll know that these “Three R’s” have stirred up the health care media.

Who knew such insurance parameters could be so intriguing? Here’s some context on participating insurers’ triple threat protection:

  • Risk adjustment operates as a give and take among insurers. The pressure on those with higher-risk pools will be alleviated with funds from insurers with lower-risk pools.
  • Meanwhile, reinsurance acts as an insurance company’s own insurance policy, in which a $63 fee is assessed on each person, including dependents, covered by most employer-sponsored health insurance. The Wall Street Journal has dubbed this specific provision the “belly button tax,” The reinsurance fund will total over $20 billion up to 2017, and insurers can dip into this fund and be reimbursed 80% of a consumer’s annual claims that exceed $45,000.
  • Lastly, there are the Risk Corridors, infamously portrayed by Obamacare critics (including myself), as the “taxpayer bailout.” Risk corridors were around before Obamacare, and almost every publication that delves into this subject points out that they were also connected with the launch of Medicare Part D in 2003. Risk corridors were built into the law as another mechanism to prevent insurers from suffering losses in the once likely, and now empirically verified, event that their risk pools skew old and sick – especially because individuals can sign up for coverage and no longer be denied based on their pre-existing health statuses. Insurers are pretty much prevented from gauging their pool’s health status until they start receiving claims. This provision, along with the reinsurance component, will sunset by 2017.

After looking into risk corridors a bit more, it seems as if the “taxpayer bailout” label may be hyperbolic in some cases. But bailout or not, taxpayers are already subsidizing insurers due to Obamacare regulations.

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