O'Reilly Echoes Rubio's Misleading Attack On Affordable Care Act

Blog ››› ››› JUSTIN BERRIER

O'Reilly and RubioFox News' Bill O'Reilly distorted a provision of the Affordable Care Act known as risk corridors, falsely claiming the law subsidizes insurance companies if they don't make a profit under the new health care system.

On the November 19 edition of Fox's The O'Reilly Factor, O'Reilly hosted Sen. Marco Rubio (R-FL) to discuss Rubio's Wall Street Journal op-ed in which he described risk corridors as a "bailout for Obamacare." During the segment, O'Reilly adopted Rubio's attack, claiming that "one of the little-known parts of Obamacare is an option for the feds to reimburse private health insurance companies if they are not making enough money under the affordable health care law. In effect, the feds would subsidize private insurance companies if they don't make profit from Obamacare." Rubio described the provision by claiming "any shortfalls that may happen as a result of the law, that they are going to come in and make up for it. And according to the rule the way they've written it, it could be any amount":

But risk corridors are not a bailout. The provision is a way of stabilizing the insurance market by protecting insurers who cover higher-risk individuals by transferring costs from insurance plans that cover healthier people. A Health Affairs policy brief explained that risk corridors are "particularly useful in a period of transition, such as is likely to be the case in 2014 when many sicker people and those with preexisting health conditions will be buying coverage through insurance exchanges for the first time":

Under this arrangement, insurance plans whose costs turn out to be at least 3 percent less than their target cost projections -- presumably because their enrollees experienced fewer health problems than expected -- will pay a percentage of the money they saved to HHS. The agency will then use that money to compensate insurers whose actual costs turned out to be more than 3 percent higher than projected -- presumably because their enrollees had more health expenses than initially projected. These payments in effect will cover a portion of any losses that the plans incurred on high-cost individuals.

Talking Points Memo quoted Jonathan Gruber, a professor of health economics at MIT, who pointed out that repealing the risk corridor program "would essentially add uncertainty" to the health care market and could lead to higher health care costs:

The program, which legislation mandates to sunset at the end of 2016, is one of several Obamacare provisions -- along with a reinsurance program and risk adjustment program -- aimed at combating adverse selection and prevent some insurers from spiking premiums during the first few years of the Obamacare exchanges.

"This is yet another feature of Obamacare that's designed to minimize any disruption caused to insurance markets," said Jon Gruber, an economist at MIT and architect of Obamacare who supports the law. "The risk corridor is pretty wide so you have to make a lot of money or lose a lots of money for it to kick in. I think repealing it would essentially add uncertainty. Insurers are conservative folks. They don't like uncertainty. They're going to raise their prices."

A Bloomberg Businessweek article pointed out that Rubio's effort to repeal the entire risk corridor program "is a clue that his real motivation isn't to eliminate the possibility of a payout but to eliminate the Affordable Care Act altogether." The article quoted health care policy expert Timothy Jost who argued that "repealing those risk corridors is basically breaking a contract with the insurers" and called it "a way of killing the exchanges":

"The insurers who signed up for the exchange did so with the understanding that their risk was limited," says Professor Timothy Jost, a health-care expert at the Washington and Lee University School of Law. "So repealing those risk corridors is basically breaking a contract with the insurers that if they would come into this program, there'd be some limit to their risk exposure."

Eliminating risk corridors could set off a chain reaction that undermines the law. Some insurers would drop out or decline to participate in the exchanges. Others would run into solvency issues or start charging a risk premium. The actuaries who set rates would jack up premiums for 2015. This could lead to the death spiral of rising costs and declining participation that the law's supporters worry about. "Basically, it's a way of killing the exchanges," says Jost.

Posted In
Health Care, Health Care Reform
Network/Outlet
Fox News Channel
Person
Bill O'Reilly
Show/Publication
The O'Reilly Factor
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