Insurers losing money from Obamacare plans will get a collective $7.8 billion to make up for their losses through the law’s reinsurance program, the Obama administration announced Thursday.
The Centers for Medicare and Medicaid Services will pay out $7.8 billion to 497 insurance issuers around the country, the agency announced. Insurers will get compensated for 55 percent of their claims, slightly higher than the 50 percent compensation rate originally planned.
The reinsurance program is one of three programs within Obamacare meant to distribute the risk in such a way that insurers find it financially feasible to cover all those who apply, regardless of health status. The programs compensate insurers with disproportionately sicker, more expensive enrollees with money paid out mainly by insurers with a healthier, less expensive customer pool. Republicans have accused the administration of making $3.5 billion in improper payments through the reinsurance program to help “prop up” insurers who are sustaining losses by participating in Obamacare.
Last year, payments into the reinsurance program slightly exceeded its $7.9 billion in payouts. But one of the other programs, known as risk corridors program, fell far short in payments to insurers, giving them just 12 percent of what they sought.