The GOP's Plan On The Debt Ceiling Would Actually Increase The Deficit

One of the main options House Republicans are considering as an “ask” for a one-year increase in the debt ceiling is a repeal of the Affordable Care Act’s “risk corridors,” which Republicans have recently begun arguing is a “bailout” for insurance companies.

But a new report from the Congressional Budget Office suggests that a repeal of those programs could actually lead to an increase in the deficit.

According to the CBO’s report, Obamacare’s reinsurance risk corridor programs will save $US8 billion over the next three years. The programs are set to expire in 2016. The CBO projects outlays of $US208 billion and revenues of $US215 billion “related to payments and collections for risk adjustment, reinsurance, and risk corridors” — which amounts to net receipts of about $US8 billion. Previously, the CBO had projected no net budgetary effect.

The “risk corridors” in question aim to make it easier for insurance companies to transition to the new health-care system, largely by making it less financially risky for them to sell new insurance plans on the exchanges established by the Affordable Care Act.

Until 2016, the risk corridors are set up so that the government would compensate insurance companies that have bigger costs than they expected while transitioning to the new system. The provision is designed to protect insurers that see an especially unhealthy pool of customers and end up with claims that are higher than expected.

In the report, the CBO says that the programs will encourage insurers to offer coverage under new federal regulations and limit their incentives to avoid accepting high-cost enrollees.

Democrats have pointed out that Republicans’ sudden opposition to reinsurance and risk corridor programs flies in the face of similar provisions they supported as part of Medicare Part D. The risk programs in Medicare Part D are actually permanent. 20-two current Senate Republicans and many prominent House Republicans, including Speaker John Boehner and Majority Leader Eric Cantor, voted for Medicare Part D with risk provisions included.

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