In case anyone needs further proof that Fox Business should not be relied upon for anything that might need facts to back it up, let this clip from Wednesday's Fox News HQ set the record straight.
Greg Jarrett and David Asman resurrected the zombie lie about "insurance company taxpayer bailouts" in the ACA, further confirming their ignorance about how the risk corridors in the ACA are structured.
So here's a little lesson. The point of this particular provision is to make sure insurers have some sort of safety net in case their actual experience with claims ends up being more than expected. On the other hand, should it be less than expected, insurers are required to pony up a payment to a fund which is then used to cover losses over a certain amount in any given year.
The distortion that risk corridors are an insurance company bailout is a frequent theme on Fox, but this latest narrative is especially misleading. What the Fox hosts failed to acknowledge is that the estimated $5.5 billion payment doesn't come from taxpayers, but from the insurance companies themselves. The risk corridor provision transfers money from insurance companies with healthier risk pools to companies with less healthy risk pools with higher than anticipated costs.
While the federal government may be required to subsidize some of the payment in extreme circumstances, White House officials expect that the entire risk corridor cost over the next year will be borne by the insurance companies themselves.
Since ACA enrollment ratios exceeded expectations among younger people, it's reasonable to expect that insurers will find themselves well within their anticipated risks or will be able to handle their risks between themselves.
It's a convoluted reinsurance program, and it's more complicated than just shrugging and calling it a bailout. But when you're Fox News, the goal is to make viewers stupid, not inform them, and they've succeeded once again.
