WellPoint: ACA Bailout Not Ruled Out

By Tony Cook, The Indianapolis Star
McClatchy-Tribune Information Services

May 15--One of the nation's largest health care insurers said Wednesday that it could take advantage of what Obamacare critics are calling a taxpayer bailout.

WellPoint CEO Joseph Swedish, who earned nearly $17 million last year, said Wednesday that the Indianapolis-based company could seek a federal subsidy built into the Affordable Care Act for unprofitable plans.

Under the health-care overhaul, insurance companies participating in new health insurance exchanges can qualify for federal subsidies if claims cost at least 3 percent more than their premium revenue. Those subsidies are funded with payments from other insurers who earn a profit of 3 percent or more.

These "risk corridors" run through 2016 and are intended to protect insurers who may not otherwise participate in the federal health insurance exchanges.

But critics, including Republican opponents, have called the risk corridor program a taxpayer-funded bailout for insurers.

"The next three years, we'll see how it plays out," Swedish told investors at the company's annual shareholder meeting in Indianapolis. "But my sense is that we'll be able to take advantage of it, but our number one goal is to not put ourselves in the position of having to be the beneficiaries of risk corridor payments."

Risk corridors defended

Swedish's comments came in response to a question from David Hogberg, a health care policy analyst for the National Center for Public Policy Research, a conservative group in Washington D.C. that promotes free enterprise.

"If the situation arises in which WellPoint qualifies for taxpayer money through the risk corridor, can we get your promise that you will reject it?"

Swedish declined to answer directly, explaining that the risk corridors were intended to protect consumers, keep premium prices stable and entice insurers to participate in the new health insurance exchanges.

"Generally, if you don't have that kind of protection, many times organizations taking high risk like us may choose not to enter the market," he said.

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That's because the law requires insurers who participate in new health exchanges to cover everyone, regardless of their health. That has led to concerns about whether plans offered on the exchanges would attract enough healthy individuals to keep medical costs down.

The Obama administration has called the risk corridors "an important safety valve for consumers and insurers as millions of Americans transition to new coverage in a brand new marketplace."

The White House says it expects the risk corridor program to be budget neutral, "with payments in equaling payments out."

Exchanges called 'death spiral'

But critics aren't convinced.

"The exchanges won't attract a typical risk pool," Hogberg said in a prepared statement after the shareholder meeting. "Rather, they are going to attract people who are generally older and less healthy, a population that, risk corridor or not, will lead to a death spiral."

One of WellPoint's competitors, Louisville, Ky.-based Humana Inc., has already said it expects to seek money through the risk corridor program.

WellPoint spokeswoman Kristin Binns said Hogberg's group misrepresented Swedish's comments.

"Mr. Swedish simply said that risk corridor payments were a temporary program to help mitigate risks and create a stable rate environment, for the benefit of consumers," she said. "He said WellPoint would consider accepting the risk payments if we qualified in order to provide better affordability and more stable rates for our members and for the benefit of the health care system."

WellPoint is the nation's second-largest health insurance company. It operates Anthem Blue Cross and Blue Shield plans in 14 states, including Indiana.

Bloomberg contributed to this story.

Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.


(c)2014 The Indianapolis Star

Visit The Indianapolis Star at www.IndyStar.com

Distributed by MCT Information Services

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