Health Overhaul Protest Chicago

Protesters gather across the Chicago River from Trump Tower on Friday to rally in support of the Affordable Care Act. Earlier, President Donald Trump and GOP leaders yanked their bill to repeal Obamacare off the House floor when it became clear it would fail badly.

(Charles Rex Arbogast, Associated Press)

WASHINGTON -- Ohio health insurers are owed more than $100 million by the federal government, which was supposed to protect them from losses during Obamacare's startup, according to a cleveland.com review of records. They may never get it, thanks to a Republican provision.

The provision slipped into a spending bill in late 2014, after the Affordable Care Act was under way, restricted the government in making payments.

As a result, some insurers have been forced to pare down their medical networks, cut their markets or leave Obamacare altogether -- contributing to the higher premiums for customers and insurer withdrawals that Republicans point to as proof of the program's failure.

Republicans say they were just preventing an ill-advised insurer bailout because, they say, Obamacare was bound to fail. But Democrats and some health policy analysts say Republicans purposely sabotaged the Affordable Care Act by denying promised payments to insurers at a crucial time.

It was when insurers were trying to find the right equilibrium between premiums and the cost of patient health care. The insurers were supposed to be protected against large losses if their early projections proved wrong -- and had they been protected, they would not be waiting for the millions the government owes them.

The federal government owes $96.5 million to Ohio insurers for losses in just 2014 and 2015. The figures and size of the problem in Ohio have gone unreported until now.

Cleveland.com examined them after House Republicans failed to repeal and replace the Affordable Care Act last week and then maintained they wanted to help the program succeed. Democrats said if that were true, the payments to insurers -- a way to assure Obamacare's success -- would never have been blocked.

Among the cleveland.com findings:

The inability to get the money played a role in the demise of Coordinated Health Mutual, also known as InHealth, a nonprofit Consumer Operated and Oriented Plan (CO-OP) in Ohio that went out of business last year. A

Medical Mutual of Ohio says the government owes it $31.5 million for the combined years of 2014, 2015 and 2016. Medical Mutual remains in business but has narrowed its market and its network of providers as it adapted to the challenges.

HealthSpan, which last year ceased operations after financial losses and

Humana Health Plan of Ohio, which as part of the national Humana network is pulling out of the Affordable Care Act market next year, is owed $8 million for 2014 and 2015.

Summa Insurance Company, part of the Akron-based Summa Health System, is owed $2.1 million for 2014 and 2015 combined

Some of these examples include money owed to insurers for 2016, and the information was volunteered by the insurers. But full 2016 data for all insurers is not expected to be available publicly until November. Meantime, cleveland.com calculated the federal debt to insurers just for 2014 and 2015. Based on insurer projections, the amount is certain to soar past $100 million when 2016 is added.

It is unlikely to ever be paid. Companies with deep pockets and other insurance products have managed to survive anyway, but the losses informed even their subsequent decisions.

In other words, said U.S. Rep. Tim Ryan, a Niles Democrat, the Republicans helped create problems for insurers and then were able to say, "Look at all these insurers pulling out."

Let's explain the details.

The system, as it was set up:



Democratic lawmakers and several policy analysts said the blame goes squarely to Republicans. In a late-year, must-pass spending bill in 2014, Republicans in Congress inserted a simple paragraph that restricted the payments to insurers.

Under the Affordable Care, insurers were supposed to be protected against excessive losses. One way of protecting them involved a concept known as a risk corridor, a way to guard insurers against inaccurate projections. At the ACA's full start in 2014 no one truly knew what the enrollment mix would be -- young, old, healthy, sick -- and how much insurers would have to spend on medical care.

Risk corridors were not a new concept. Republicans embraced risk corridors, in fact, when they expanded prescription drug benefits under Medicare in 2006 and Medicare insurers didn't know yet if their cost projections would be accurate. This was during President George W. Bush's administration, but neither party objected to the insurer-protection plan, said Meaghan Smith, who was communications director for health in the Department of Health and Human Services (HHS) in President Barack Obama's administration.

With risk corridors, insurers made their best estimates when they priced their policies and offered them for sale. The projections were based on actuarial principles and double-checked by state insurance officials and HHS. If insurer projections turned out to be wrong even after all that checking and a company made a big gain, the company would have to share part of it with the losers through the risk corridor program, maintained by the federal Centers for Medicare and Medicaid Services, or CMS, a division of HHS.

But if a company projected wrongly and wound up with losses because of high medical claims or insufficient premiums, it could recoup some of that money from CMS.

Risk corridors "set up the guardrails," said Sabrina Corlette, a research professor at Georgetown University's Health Policy Institute. "So if a carrier had losses that were above a certain threshold, they could submit that to HHS for reimbursement."

This was to last only during the first three years of ACA enrollment -- 2014 through 2016 -- and companies were expected to use their experiences to adjust their next-year premiums or member services as they got a better sense of the market. Under risk-corridor rules, no company would give up all its gains, and no company would be able to recoup all its losses. But it could recoup enough to stay in business.

Changes Republicans wanted:



Obamacare passed narrowly when Democrats had majorities in Congress. Republicans never liked it. So in 2014, as both parties hurried to pass a year-end spending measure that was already overdue, Republicans managed to work in a small but meaningful change to the Obamacare rules -- specifically, the risk corridor rules.

They required that the risk corridors be self-funding, or what is known as budget neutral. That meant any money paid out to insurers would have to come from money coming in from other insurers.

Key to this: CMS would not be permitted to draw from other accounts if the risk corridors lacked enough money. Democrats arguably left themselves open to this change by not being more specific when drafting the ACA.

Yet it's clear Republicans knew this would create problems. Some even bragged about it.

"There's no question that was the intent," said Corlette. "I think that is absolutely what they were doing."

"They were out to sabotage," agreed Nicholas Bagley, a University of Michigan law professor. "That was the point of monkeying with risk corridor appropriations."

If so, their monkeying worked.

"There's no question," said U.S. Sen. Sherrod Brown, an Ohio Democrat, "that efforts to undermine the ACA's risk corridors program drove insurers out of Ohio's marketplace and starved our state's CO-OP of the resources it needed to get off the ground, leading to less competition and higher prices for consumers."

A recent report by the American Academy of Actuaries agreed that "the failure to pay the full amounts led to financial difficulty for many plans," particularly the non-profit CO-OP plans.

Republicans' defense:

Republicans claimed they were merely preventing what they thought would be an ill-advised "bailout" if the risk corridors turned out to need more money. Besides, some Republicans said, CMS itself had projected earlier that the risk-corridors would not need a handout, although congressional Republicans were skeptical.

"Obamacare is fundamentally flawed," Olivia Hnat, spokeswoman for Rep. Pat Tiberi, said when asked about Republicans using the risk corridors to undermine Obamacare. Tiberi is on the House Ways and Means Committee and chairs its subcommittee on health.

Tiberi's was the only office of an Ohio Republican who responded on the record to cleveland.com, although others provided GOP talking points.

Republican Sen. Rob Portman voted against the bill with the provision that created problems for insurers. Portman had not criticized the provision -- though he has criticized Obamacare repeatedly -- but cited other, unrelated aspects of the spending bill as his reason for voting "no."

"The individual mandate is failing to attract younger and healthier consumers, leaving only sicker, older and more expensive patients in the marketplace," Hnat said. "No matter how much the government subsidizes care or props up the insurance market, the individual mandate hasn't worked and it is just one reason why Obamacare is on an unsustainable path."

How things played out:

The predictions that the risk corridors would not need more money, while not legally binding, turned out to be wrong. By the time profits and losses were counted for 2014, profitable insurers had paid a collective $362 million into the risk corridor program nationally. This included $1.8 million from Anthem Blue Cross and Blue Shield of Ohio and $2.3 million from CareSource, two of the companies turning profits, CMS records show, although Anthem had a small loss -- $16,036 -- in the ACA business market.

But claims for losses totaled far more: $2.87 billion nationwide. This included $11 million from HealthSpan Integrated Care, the successor to the Kaiser Permanente network in Ohio, and nearly $9.3 million from Humana.

The Obama administration considered tapping other CMS accounts to make up the difference, saying insurers were promised this protection by the ACA and arguing it would all work out in the long run. But the Republicans' small provision would not allow other accounts to be tapped, a matter that is still being argued in courts. As a result, CMS only had enough money to pay 12.6 percent of the amounts it owed insurers for 2014.

Then came 2015, a year that saw more insurers participating in the ACA. But the problem was even worse: Risk corridor payments owed to insurers hit $5.8 billion for 2015.

They included $7.8 million owed to HealthSpan Integrated Care, $8 million to the unrelated HealthSpan network, $4.3 million to Medical Mutual and $37.2 million for Ohio's nonprofit CO-OP -- the one that has now closed.

Cruel twist:

Not every insurer suffered. Among those paying into the health corridors because they had sufficient gains in 2015 were Anthem ($4.2 million), Aetna ($135,795) and Coventry Health and Life ($623,281).

Then there was Molina Healthcare, an insurer in nine ACA state markets. Molina projected its premiums and costs well -- and had gains -- in most of those markets, including Ohio. So CMS told Molina's Ohio operation that because of its gains, the company had to pay $508,729 into the risk corridors program in 2015. Molina was similarly billed for gains it made in Michigan, New Mexico and Texas, bringing its total due to $1.5 million.

Yet Molina lost a lot more money in California, Florida, Utah, Washington and Wisconsin. So under the risk corridors program, the government owes Molina $52.3 million for those 2015 losses.

But under the CMS rules, dictated by the legislative language from 2014, Molina cannot get even a fraction of the money it is owed for 2015. That's because the government is not paying any insurers for 2015. Instead, it is still working on paying down the money it owes insurers for 2014, and its ability to ever pay off those sums is in doubt.

The cruel twist: The government has demanded that Molina pay every penny it owes on the other side of the ledger -- for the gains, that is. As Molina noted in a lawsuit in the US. Court of Claims in January, the rules limiting payments only seem to apply when the government is the one writing the checks.

How this will end is unknown. Last fall, the Obama administration discussed the possibility of settlements with the insurers suing it for risk corridor money. Among Ohio companies, only Molina is known to be involved in litigation. But the prospect of settlements, and therefore the use of other government accounts to pay them, raised hackles among Republicans on the House Energy and Commerce Committee, who considered this the threat of a bailout.

One insurer has seen victory, however.

Oregon-based Moda Health last month won a decision in the U.S. Court of Claims for $214 million. Judge Thomas Wheeler wrote in his opinion that the government made a promise in the risk corridors program. Now it must keep it.

"Whether under statute or contract, the Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill," the judge wrote. "Today, the Court directs the Government to fulfill that promise. After all, to say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government."