|By Tony Cook, The Indianapolis Star|
|McClatchy-Tribune Information Services|
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
Risk corridors defended
Swedish's comments came in response to a question from
"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.
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."
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,
WellPoint is the nation's second-largest health insurance company. It operates
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