What’s happened to the 3Rs lately? An update.

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​Repealing and replacing the ACA may be out of vogue for now, but lingering issues are still causing volatility.

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Back in May, I posted an article detailing the rise and fall of the 3Rs…Risk Adjustment, Reinsurance and Risk Corridors…and the Republican’s quest to squash the ACA. At that time, before McConnell & the Senate failed to repeal or replace Obamacare, the carriers were nearly $15B in arrears and holding their collective breath on whether to stay in the game or bail out of counties altogether.

Here we are a couple of months later, and while the Congressional landscape appears to have changed for now, i.e. they’ve given up and moved on to other priorities, the lingering issue of the 3Rs still remains.

Where are we now?

• Today, it’s estimated the carriers are now $18.9B (and counting) in arrears up from $14.8B as of our last reporting.

• The shortfall on the Reinsurance Fund is in for the first half of 2016, although there might be some payouts at the end of this year that will lower this gap.  You’ll recall that this program was supposed to be net-neutral. But, it was only in 2014 that the fees collected actual covered carrier losses. As of the end of June 2017, there were $3.3B in 2016 fees collected and $7.5B in claims requested (another payment will be disbursed in December). The program is currently in a deficit position, owing carriers $10.7B for 2015 and 2016 combined.  

• Risk Corridor shortfalls for 2016 are still not known…well, the carriers had to provide their losses to the government already, but the public is still waiting on the tally.

What hasn’t changed?
Congress (fueled by the White House) persists in intimating they may not reimburse carriers for Cost Sharing Reductions (that’s its own blog, and its own ACA provision with its own issues). Lawsuits filed by the carriers are winding through the courts (here’s the latest update). Carriers continue to withdraw from coverage areas, although there have been some carriers stepping into “bare” counties (check out our update). Deficits are mounting. And premiums continue to increase as instability reigns.

Yup. Sorry to say, it’s still pretty volatile out there.  Maybe lawsuits will be won and/or refunds will be provided in time to provide stability for the 2019 rate setting deadline? One can dream.