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Megan McArdle

Congress Gets Its Hands on Insurer Incentives

The GAO says the Obama administration’s subsidy system for money-losing health insurers is legal -- for now. But it might not be legal next year.
But what about next year?
But what about next year?

The Government Accounting Office says that the Barack Obama administration's subsidy system for money-losing health insurers is legal -- for now. But depending on what Congress does with 2015 appropriations, it might not be legal next year.

For those who are confused, a little background. The Affordable Care Act includes several reinsurance programs that were supposed to help insurers mitigate the risk of mispricing their policies as they ventured into the strange new world of selling insurance on the government exchanges. The administration is leaning hard on these programs to keep insurers in the game, allowing payments out to be higher than payments in, and otherwise substantially reducing the potential losses that insurers can experience when selling exchange policies. Critics have charged that they are doing this to keep policy prices artificially low for the remainder of Obama's term (these provisions expire in 2017).