Fox News Still Doesn't Understand The ACA's Risk Corridors

Fox News launched a new false attack on the Affordable Care Act's risk corridor provision, suggesting that the program which shuffles money between private insurance companies would cost taxpayers $5.5 billion.

On the March 5 edition of Fox's America's News HQ, co-host Greg Jarrett and Fox Business host David Asman promoted the GOP claim that the ACA's risk corridor provision is a “taxpayer funded bailout” for insurance companies, suggesting that an estimated $5.5 billion in payments over the next year contradicted President Obama's promise that there would be no more bailouts and that the ACA would not add to the deficit. Asman further claimed the administration is “calling it a temporary pool of money. Now maybe if you believe that Obamacare wasn't going to cost a dime, you'll buy that explanation. But most of the time when the government sends money in to that degree, into these companies, it doesn't get the money back”:

The distortion that risk corridors are an insurance company bailout is a frequent theme on Fox, but this latest narrative is especially misleading. What the Fox hosts failed to acknowledge is that the estimated $5.5 billion payment doesn't come from taxpayers, but from the insurance companies themselves. The risk corridor provision transfers money from insurance companies with healthier risk pools to companies with less healthy risk pools with higher than anticipated costs. 

While the federal government may be required to subsidize some of the payment in extreme circumstances, White House officials expect that the entire risk corridor cost over the next year will be borne by the insurance companies themselves. As Bloomberg reported:

Under the Patient Protection and Affordable Care Act, insurers who record a profit of 3 percent or more on their Obamacare business would put some of the gains into a government-controlled fund. Companies whose claims cost at least 3 percent more than their premium revenue can access the money.

“If you want to insure the uninsured, and you want to set up a competitive marketplace and drive health-system improvement, you're not going to do that without off-loading some of the risk for insurance providers,” Dan Mendelson, the president of Avalere Health, a Washington consulting firm, said in a telephone interview.

The administration expects to collect enough from profitable insurers to cover the costs of payments to other companies in the risk corridors program, Emily Cain, a spokeswoman for the Office of Management and Budget, said in an e-mail.

The fact that the payments for the program come from the insurance companies themselves is crucial context that has consistently been missing from Fox's coverage of the issue as they attempt to bolster the GOP's talking point that risk corridors are a bailout for insurance companies.