Stopping Risk-Adjustment Payments and Cutting Navigator Grants Make ObamaCare Harms More Transparent

The Trump administration hasannounced it is suspending so-called “risk adjustment” payments to insurers who participate in ObamaCare ’s Exchanges, andcutting spending on so-called “navigators,” who help (few) people enroll in ObamaCare plans.  TheWashington Post’s Catherine Rampell and other ObamaCare supporters are calling these stepssabotage. In fact, what these steps will do is make the costs of ObamaCare ’ssupposedly popular preexisting-conditions provisions more transparent.Risk-Adjustment (Bailout) Payments to InsurersObamaCare ’s so-called “risk adjustment” program exists to funnel money to insurers who enroll lots of sick people who cost more in claims than they pay in premiums. Without it, insurers probably wouldn’t participate in ObamaCare. We may therefore confidently describe the risk-adjustment program as a bailout designed to rescue insurers from the costs of ObamaCare’s preexisting-conditions provisions. The risk-adjustment program does a better job of protecting insurance companies than sick patients. Those preexisting-conditions provisionsliterally punish insurers for offering coverage that the sick find attractive. They therefore create powerful financial incentives for insurers to make their offerings unattractive to the sick.The risk-adjustment program is supposed to counteract those incentives.Anecdotal evidence andempiricalresearch both show it’s not working. The risk-adjustment program is failing to counteract the perverse...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs