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Risk Corridors

November 18th, 2013 - 2:45 pm

If you’ve never heard of “risk corridors” you’re missing an important part of your education.  They are part of Obamacare. Megan McCardle explains that they are way for insurance companies to insure themselves against loss; the spoonful of sugar that makes the medicine go down. A risk corridor is a pathway of money down which an Obamacare provider can safely tread.

The insurers are putting in a lot of work helping to get the exchanges working, and they will be very necessary allies indeed if Democrats don’t want to go into next year’s midterms just as insurers are announcing their 2015 rates, and indeed, whether they’ll be staying in the insurance market.

But it seems that the administration is looking for ways to sweeten the deal for insurers. Politico reports, “Administration officials say they can take care of that problem. They’re going to look at ways to adjust special payment mechanisms built into Obamacare, called ‘risk corridors,’ that pay health plans if they have higher costs than they expected.” …

It’s a mechanism meant to deal with individual insurers who miscalculate their actuarial risk …

You would think that betting on the President’s plan is a sure thing. However, there’s a distinct probability the Obamacare website isn’t even going to work by the deadline the administration set for itself.  Therefore the insurance companies may have to step in and enroll by any means possible not only those who were uninsured to begin with, but the millions who have lost their insurance since Obama improved it.

CNBC reports that the “White House working with insurers to bypass … On a mission to help people bypass distressed health-insurance websites, the Obama administration said it may allow big insurers to directly sign up those who qualify for tax credits …” There is now nothing more urgent than to save the consumer from the consequences of the administration benefits. And the only sure way is getting the insurance companies to do it.

The move came as a pressure mounted with only a few weeks left before the rescheduled deadline for the website to work—Nov. 30, reported the newspaper. services 36 states, which refused to run their own exchanges.

The New Republic writes that “the odds that will be working well by late November seem shakier by the day. A new story in the Washington Post quotes “an official with knowledge of the project” who said the system was still struggling with high volumes of customers … the definition of  ’working well’ is a subjective matter.” Nobody is talking about a victory lap any more. The administration will be glad to escape with its skin whole.

At this point, however, transforming the existing, opqaue market into a more competitive, transparent one must come second to making sure everybody can get coverage on time. That’s why administration officials have been huddling with insurers about how to make more use of direct enrollment. Step one is to make sure that “side door” enrollment works smoothly. It doesn’t fucntion well right now, because—you guessed it—it relies on the same information technology system that powers Fixing that portal, which techies tell me is called an “application programming interface,” is high on the administration’s to-do list. But it’s not clear (to me) whether improving the portal might require design modifications—or to what extent its success depends upon other, ongoing repairs to the federal website.

The Daily Caller says Joe Biden appears to be distancing himself from the crowning achievement of the president. Who can blame the Vice President for wanting to keep the spare tire in the trunk as all four tires on the road blow out. Unfortunately the program’s difficulties are going to be a massive headache for the insurance companies.

However, they may be protected from loss by the "risk corridors".

McCardle wonders how the president can twist the law into necessary contortions to do this:

I’ve been skeptical of the argument that the risk corridors will fix things; they’ll mitigate insurer losses if the patient mix is too sick, but they don’t turn losses into profit. It’s a mechanism meant to deal with individual insurers who miscalculate their actuarial risk, not a whole marketplace filled with sicker and older patients than expected.

But this is a bit different; the administration is clearly looking for a way to increase the payments so that they defray more of the unexpected costs. Only looking at the statute, I don’t see how they can. The language is extremely clear …

you’d see that the payments are quite firmly set as a percentage of allowable costs that exceed expectations — and “allowable costs” is quite precisely defined. I am not a lawyer, of course, but this doesn’t seem to offer bureaucrats at the Department of Health and Human Services much discretion to run a slush fund.

But that difficulty will prove little hindrance to the Lightworker. Marco Rubio has figured it out already and is pointing out little noticed fine print in Obamacare that allows the government to reimburse insurance companies for up to 80% of their losses. The Washington Examiner notes:

As the troubled rollout of President Obama’s health care law has threatened to wreak havoc with the individual insurance market, more analysts are focusing on a program buried within Obamacare that compensates insurers for excessive losses.

Last Thursday, Department of Health and Human Services officials revealed that they were looking into ways of expanding the program to funnel more money to the industry.

Yet even though it exposes American taxpayers to potentially massive financial liabilities, the Congressional Budget Office never calculated the potential costs of this program as part of its original Obamacare cost estimate, let alone an expanded version of it.

The “risk corridor” program is one of several within Obamacare that were designed protect insurers against the threat of excessive losses stemming from the new requirement that they must cover individuals with pre-existing conditions.

The only person at risk is the consumer and the taxpayer.  Nobody can say how much it will cost.  See if you can figure it out from the instructions provided.  And there’s more. ”Risk corridors” not only funnel money to insurers, they also put the entire industry at the mercy of Obama. The Obamacare screwup and the offload of its fallout to the to the insurers has done three things at once.

1. Destroyed or damaged the insurance customer base;
2. Imposed gigantic costs which they are forced to absorb;
3. Made them dependent on “risk corridors” to have any chance to make good their losses and to turn a profit.

The companies can either take the bribe and get rich or refuse the payoff and go broke. In this Obama is following in the footsteps of the founder of Britain’s National Health Service, Lord Bevan. “Doctors were initially opposed to Bevan’s plan, primarily on the stated grounds that it reduced their level of independence. Bevan had to get them onside, as, without doctors, there would be no health service. Being a shrewd political operator, Bevan managed to push through the radical health care reform measure by dividing and cajoling the opposition, as well as by offering lucrative payment structures for consultants. On this subject he stated, ‘I stuffed their mouths with gold’.”

The choice for customers, however, is more restrictive. They can only go broke if only because they have to provide “the gold”. In recompense, however, they get ‘better’ insurance as this Democratic Senator explains.

The phrase “risk corridors” is a wonderful invention. Obamacare is beginning to have more doors than a Charlie Chan mystery house. There are side doors, backdoors, risk corridors. Doubtless there are secret panels, trapdoors and revolving portals as well. They may not lead to anywhere but ruin, but the view is picturesque in a gothic sort of way. However, there’s no risk to it at all. Heads Obama wins, tails someone else loses.


Risk Corridors

Like a tunnel that you follow
To a tunnel of it’s own
Down a hollow to a cavern
Where the sun has never shone,
Like a door that keeps revolving
In a half forgotten dream,
Or the ripples from a pebble
Someone tosses in a stream.

When you knew
That it was over
You were suddenly aware
That your policy was turning
To the new

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"Risk Corridors"
From the wiki for "Abbatoir."
"In the latter part of the 20th century, the layout and design of most U.S. slaughterhouses was influenced by the work of Dr. Temple Grandin.[5] She suggested that reducing the stress of animals being led to slaughter may help slaughterhouse operators improve efficiency and profit.[6] In particular she applied an understanding of animal psychology to design pens and corrals which funnel a herd of animals arriving at a slaughterhouse into a single file ready for slaughter. Her corrals employ long sweeping curves[7][8][9] so that each animal is prevented from seeing what lies ahead and just concentrates on the hind quarters of the animal in front of it. This design – along with the design elements of solid sides, solid crowd gate, and reduced noise at the end point – work together to encourage animals forward in the chute and to not reverse direction.[10]"
The applicability of the preceding to this thread is left to the gentle reader.
1 year ago
1 year ago Link To Comment
Like SEIU pensions, Social Security, Medicare, Medicade...this is all a Ponzi scheme, run by the Marxists who don't care if capitalism collapses.

The taxPAYERS have more and more boulders piled on their backs...until the system collapses in on itself.

Our knees are buckling, the hardcore left is chuckling and our Republicans are knuckling under the weight of a Cloward-Piven orgy of intended consequences.
1 year ago
1 year ago Link To Comment
As we have been discussing in other threads, the law is only what Obama and his minions say it is at any given moment. Congress, the Courts, and the very Constitution itself has no bearing on what American citizens have to endure. radag brown's revelation is no surprise. Until the American people decide that they will not put up with it any more, and that decision will not be carried out electorally; or until everything collapses, we are serfs and commodities to be bought, sold, and exploited.

Subotai Bahadur
1 year ago
1 year ago Link To Comment
All Comments   (69)
All Comments   (69)
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Haven't heard any RINO apologies to the very recent ''defunders'' such as Lee & Cruz. Looks to me like the Defunders are the only group that doesn't smell like Eau de Colognoscopy
1 year ago
1 year ago Link To Comment
I appreciate the fact that Megan McCardle is a useful source of information on a number of financial subjects, but I confess to always getting hung up on the fact that she helped get Obama elected the first time by being one of the "intelligentsia" that gave Obama his faux "legitimacy."

It would be nice if these experts would look at the whole forests like so many of us little people know how to do.
1 year ago
1 year ago Link To Comment
She is a useful source, at times. But at all times any data from her has to be evaluated in the light of her support of Obama. Which side she is working for is always suspect. Something that supporters of the Constitution have to keep in mind.

Subotai Bahadur
1 year ago
1 year ago Link To Comment
The www site will never be completed. And that is my optimistic guess.
1 year ago
1 year ago Link To Comment
" the definition of ’working well’ is a subjective matter.”

Famous last words of the incompetent.

If only the government could go bankrupt and fail like any normal endeavor.
1 year ago
1 year ago Link To Comment
Fear, fire, foes: awake! To arms!


It little profits that an idle king,
By this still hearth, among these barren crags,
Match'd with an aged wife, I mete and dole
Unequal laws unto a savage race,
That hoard, and sleep, and feed, and know not me.

I cannot rest from travel: I will drink
Life to the lees: All times I have enjoy'd
Greatly, have suffer'd greatly, both with those
That loved me, and alone, on shore, and when
Thro' scudding drifts the rainy Hyades
Vext the dim sea: I am become a name;
For always roaming with a hungry heart
Much have I seen and known; cities of men
And manners, climates, councils, governments,
Myself not least, but honour'd of them all;
And drunk delight of battle with my peers,
Far on the ringing plains of windy Troy.

I am a part of all that I have met;
Yet all experience is an arch wherethro'
Gleams that untravell'd world whose margin fades
For ever and forever when I move.
How dull it is to pause, to make an end,
To rust unburnish'd, not to shine in use!
As tho' to breathe were life! Life piled on life
Were all too little, and of one to me
Little remains: but every hour is saved
From that eternal silence, something more,
A bringer of new things; and vile it were
For some three suns to store and hoard myself,
And this gray spirit yearning in desire
To follow knowledge like a sinking star,
Beyond the utmost bound of human thought.

There lies the port; the vessel puffs her sail:
There gloom the dark, broad seas. My mariners,
Souls that have toil'd, and wrought, and thought with me —
That ever with a frolic welcome took
The thunder and the sunshine, and opposed
Free hearts, free foreheads — you and I are old;
Old age hath yet his honour and his toil;
Death closes all: but something ere the end,
Some work of noble note, may yet be done,
Not unbecoming men that strove with Gods.

The lights begin to twinkle from the rocks:
The long day wanes: the slow moon climbs: the deep
Moans round with many voices. Come, my friends,
'T is not too late to seek a newer world.

Push off, and sitting well in order smite
The sounding furrows; for my purpose holds
To sail beyond the sunset, and the baths
Of all the western stars, until I die.
It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.

Tho' much is taken, much abides; and tho'
We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield."

Alfred, Lord Tennyson
1 year ago
1 year ago Link To Comment
While the shepherd sets wolves on his sheep
And the emperor halters his kine,
While Shame is a watchman asleep
And Faith is a keeper of swine,

Let the wind shake our flag like a feather,
Like the plumes of the foam of the sea!
While three men hold together,
The kingdoms are less by three.

All the world has its burdens to bear,
From Cayenne to the Austrian whips;
Forth, with the rain in our hair
And the salt sweet foam in our lips;

In the teeth of the hard glad weather,
In the blown wet face of the sea;
While three men hold together,
The kingdoms are less by three.


ending of "A Song in Time of Order"
Swinburne 1852
1 year ago
1 year ago Link To Comment
I always said during the Cold War that if there was an all out nuclear exchange between the Soviet Union and the United States, that after the first exchange we would wait the obligatory two weeks after for the maggots to crawl out of their bomb shelters...and nuke the bastards looking through the garbage of destruction with the third part of our triad. Mean spirited? Oh, yeah. I'm starting to count lamp posts in my town.

While we put up with the Soviet crap back then, we now have to put up with the Progressive crap, today. Deeply immersed in the miasmic disaster that is the first black thug president, we have to hear this latest attack of racist tripe from one of the richest BLACK woman in the world:

"As long as there are people who still, there’s a whole generation – I say this, you know, I said this, you know, for apartheid South Africa, I said this for my own, you know, community in the south - there are still generations of people, older people, who were born and bred and marinated in it, in that prejudice and racism, and they just have to die."

You know, Oprah, you know, you know? Yeah Oprah, we know.

So in Winfrey's view, it's older white people that are the problem, and once they die, racism ends. Their solution to racism (but only white racism) is to get rid of the people “marinated” in it - not the ones obsessed by it.
Born and raised up north, I live in the South now and laugh at the supposition that the North was never racist – only the South was. I heard more “N” word drops growing up than I ever hear in the South. Today the false charge that the North was never racist – only those ignorant white folks in Dixie are racist is complete crap. Winfrey drops that cheap accusation above – if it didn’t happen to her it doesn’t exist – if it happened to her, it’s everywhere. But mark my words – this assault against white folks being perpetrated by the black population is uniformly racist and is going to lead to very bad outcomes. I’m the least racist person I know…but I’m sure that I’m just confused by the marinating acquired in the North as I was growing up. I’m in the South today – I must be racist.

I do know one thing for sure – I am completely pissed off at the racist comments directed and me and mine. Unfortunately, Oprah, while hoping some people will “die” has tacitly approved that some angry black folk might feel obliged to accelerate her process. Reference the recent “Knock Out” attacks of “angry” (and stupid) young black men, most recently in New York against Jews, whites, and Asians (men, women, children, old, crippled). Notice also the lack of reporting by the liberal northeast press – the pressure is building. “Knock-Outs” are considered safe by the thugs in New York because of the gun laws, but tons of folk down here carry concealed. Whack one of the good old boys down here and you’ll end up in the morgue.

However, there are Americans who won't "go quietly in the night," and are “dusting off their Springfields” to prepare a very powerful counter to her wish. How long is it that white people have to “put up” with all the threats from prominent black people – including the President of the United States?

Barack Obama is laughing at the discussions that occur regularly on this board, many only hinting at the truth of what is happening in this country, or tacitly accepting it. The Attorney General is convinced that his comments about Americans being cowards about discussing race is live and well because whites are too scared of being demonized to mount any reasonable counter. Just listen to the crap from Oprah about why the president is criticized. The Commander in Chief is now negotiating with Karzai to keep American Warriors in Afghanistan. Rumors are thick that his only intent now is to kill or damage countless warriors to keep them out of any protest against government actions after they return – damaged and dependent. He’s already cut 197 flag officers in five years that wouldn’t cowtow to his insidious plans for the country.

You know why Obama gets away with this crap? Because he’s black and whites are cowards. It is grist for a detonation. Remember the breakup of Yugoslavia? Hope for a spark-less decade.

1 year ago
1 year ago Link To Comment
Oprah is exactly correct. An entire generation marinated in affirmative action (AmeriKKKa’s word for ‘apartheid’), minority rights, and studies departments. Until everyone who advocated, enjoyed, profited from, or was employed by such racist institutions is dead, America will remain a racist country.
1 year ago
1 year ago Link To Comment
Right now the democrats are facing an existential crises. Either hold on to obamacare and submit to a wave election against them in 2014 or repeal obamacare and reject their president and save themselves. The choice will make washington stink with fear and loathing. The pubbies don't have to do anything but pick up the pieces. Right now Lee and Cruz are sitting very pretty.
1 year ago
1 year ago Link To Comment
Agreed with the following caveats:

1) the Institutional Republicans do not do something to rescue the Democrats. Such is highly possible. Passing Amnesty and Open Borders comes to mind, and is high on their wish list.

2) there *are* real elections in 2014.

3) that the margin of Democrat fraud we have to expect does not exceed 10%. Right now in our country, who counts the votes is as important and who casts the votes.

Subotai Bahadur
1 year ago
1 year ago Link To Comment
Amen, brother. Some Dem. congresscritter in California was saying a couple of days ago that she'd been called by THIRTY THOUSAND of her own constituents who were furious they'd lost their insurance and were enraged/scared by what they saw on the Covered California exchange. She was scared to pieces.

(BTW, "Covered" has an animal-husbandry meaning that is, I think, apposite here.)
1 year ago
1 year ago Link To Comment
I'm not buying the gloom and doom here.

obamacare has caused such an existential crises for the democrats (meaning a wave election against them next year.) --that even the new york times is signaling that it may be time to ditch obamacare.

In fact, I almost hope that the Obama hangs on to Obamacare past the 2014 elections so as to entirely drag down the democrats in 2014. Heck, now I don't even want the supreme court to kill obamacare because that's now the sweetest deal for the dems.

Because of the fracking revolution adding 1 million barrels@ day annually for the next couple years -- the USA will grow at 2% no matter what happens. If Obmaacare is repealed -- GNP growth will spring to 4% and the federal deficit will shrink to nothing before you can say jack rabbit. Obama's legacy will be the same as bill clinton's. both ended their presidencies with a balanced budget. even though both did everything they could to prevent that from happening.
1 year ago
1 year ago Link To Comment
Dusty Springfield ''Windmills of Your Mind"
This one shows ice dancers

this one shows wind mill stills
1 year ago
1 year ago Link To Comment
--since w added his own finale, need better title; "Landfills of Your Mind"? Or go with the windmill/Don Quixote ref, "Donkey Hooty"
1 year ago
1 year ago Link To Comment
Before i reead comments and get suicidal again, i have to say that running along the risk corridor listening to Dusty Springfield singing ''Windmills of Your Mind" is the most intense thing since sliced bread. For one thing, it reminded me my Springfield is dusty. Sgt York always put a little sweat or saliva right behind the front sight of his'n --for that little extry bit of reflection.
1 year ago
1 year ago Link To Comment
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