A former Oregon state senator who was a vocal advocate of health insurance reform before leaving the Senate last year says his own family faces premiums of over $18,000 per year – and he’s blaming Republicans in Congress who, unable to repeal the Affordable Care Act during Barack Obama’s administration, slashed funding for a critical part of that law.
“So my healthcare will soon end from my employer, the Oregon Legislative Assembly. COBRA cost for family $1857.30/month. Healthcare.gov ObamaCare PacificSource Gold Plan - $1591,” Chip Shields, a Democrat who served in the state House and Senate for over a decade, wrote on Facebook.
“Would be a lot less I think if the R's didn't block Risk Corridor funding to help defray the cost of removing coverage for pre-existing conditions,” Shields continued.
In a subsequent online conversation with The Lund Report, he elaborated, saying that Republican cuts to the ACA’s “risk corridor” program put some insurance companies out of business, and pushed others to raise their rates.
Ironically, the risk corridor program would have been retired by Jan. 1, if it had been allowed to run its full course. The program was designed to stabilize insurance premiums during the initial hears of health reform, according to the Kaiser Health Foundation. Under the program, U.S. Health and Human Services would have collected funds from plans with lower-than-expected claims, in order to offset the costs borne by plans with higher-than-expected claims. If enough plans faced losses, the federal government would have provided additional funds to smooth out their balance sheets. It would have run from 2014 through 2016.
While Republican opponents to “Obamacare” were unable to repeal the bill during Obama’s presidency, in 2015 they blocked a large share of the risk corridor program – voting to prohibit the federal government from providing those additional funds. The vote was retroactive, leaving insurers unable to collect funds they’d counted on to back-fill 2014 expenses.
These dollars would not have gone to all health insurance companies: only those who had taken on the sickest or most expensive patients. Without federal risk corridor funding, they received less than 15 percent of what they had expected.
The result was devastating to a number of insurers across the country. According to the Fiscal Times, half of non-profit insurance plans created under the Affordable Care Act closed because of inadequate risk corridor compensation.
In Oregon, Health Republic blamed Congressional cuts on its closure.
“It was a quid pro quo agreement; if risk corridors had not been a part of the ACA, health plans would have been facing unfathomable risk in a new market,” Dawn Bonder, CEO of Health Republic, told State of Reform in 2015. “Carriers participating in the ACA market entered in good faith. For the federal government to turn around and say, ‘We changed our minds” is the definition of a bait and switch.”
And companies that are still around also took a hit.
Moda Health officials said stricter oversight by regulators and financial losses were a result of the cuts – with $179.99 million in losses that the health plan had been counting on. And after the risk corridor was cut, Moda, which had offered some of the market’s lowest individual insurance rates, experienced a cash crunch, was forced by regulators to exit a number of markets and to operate under stricter scrutiny in Oregon, and ended up raising the premiums for its plans. Moda is suing the federal government over the cuts to the program.
“Three years ago, our company accepted the challenge to partner with state and federal agencies to transform the way healthcare is provided and paid for. The risk corridors program was designed to encourage insurers to participate in the opening phase of that transformation,” ,” Robert Gootee, Moda president and CEO, said in a press release “And it did exactly that, by providing a benefit to consumers through lower premium costs. It’s time now these payments were made. All we are asking is for the federal government to do what was promised.”
Executives at some Oregon insurance companies are quietly critical of complaints by insurers such as Moda, noting that it continued to count on risk corridor payments after many in the industry anticipated such cuts. Providence Health Plan, PacificSource, Kaiser Permanente and Lifewise all opted not to count on risk corridor payments when calculating their end-of-2014 financial position.
An analysis by State of Reform argues that insurers that counted on risk corridor payments misjudged the political climate.
Nonetheless, Shields continues to hold Republicans accountable. The spouse of a healthcare provider himself, and often engaged in health issues in Oregon’s Legislature, he points the finger at the U.S. Congress, not the state’s insurance companies, as he faces much higher coverage costs in 2017.
Shields noted that his family will be OK. “I make a decent living. Just wanted to share, and make the point that even without the risk corridor funding, ObamaCare would still save me, and others in a similar situation, $300 or so per month compared to the way it used to be,” he wrote. “I hate insurance companies more than anybody, but this was a broken promise that is pushing premiums higher.”
