Delays of Big ACA Taxes Won’t Necessarily Benefit Health Insurers, Ratings Company Says

The health-care industry seemed to have been among the biggest winners in the $1.1 trillion Omnibus appropriations act for fiscal 2016 signed Dec. 18 by President Barack Obama.  But Fitch Ratings has a different take on that.

A 2017 reprieve on the health insurance tax on premiums – a source of $8 billion in government revenue in 2014 and an estimated $14.3 billion by 2018, and the delay in 2018 and 2019 of the “Cadillac” excise tax on high-cost employer-sponsored plans “make insurance policies more affordable, but do not necessarily result in economic benefit for the insurers,” the ratings service said.

Meanwhile, the appropriations law continues to block payments other than from other health insurers on an Affordable Care Act program called “risk corridors,” intended to be a risk-sharing backstop from 2014 through 2016 for insurers that have high medical claims. Led by presidential aspirant Sen. Marco Rubio (R-Fla.), who calls the program a “bailout” for insurers, government appropriations were also blocked for the program in fiscal 2015.

“With the Omnibus bill’s passage, such backstops appear unlikely, at least until the next US administration is in place,” Fitch said.

Because many health insurers offering plans in the ACA marketplaces aren’t making much money, payments under the risk corridors program were limited to less than 13 percent of claims for calendar 2014. As a result, many non-profit CO-OP plans started with government funding under the ACA, which were already in financial trouble, are closing.

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