ACA Update: Will Insurers Be Financially Penalized?

The NJ Daily reports that because HealthCare.gov didn't function as it should have when it launched in October, Insurers set up new workarounds to enroll people directly. Additionally, Insurers spent — and are still spending — a lot of money in relation to many of the last-minute changes that the Administration made with regards to the Affordable Care Act (ACA). As a result, Insurers have been racking up additional administrative costs that were originally not anticipated, a result of them having to:

• Straighten out flawed enrollment files sent to them from HealthCare.gov
• Un-cancel certain policies
• Give consumers more time to pay their premiums

The Irony

The Affordable Care Act (ACA) will now cap Insurer’s administrative spending, forcing them to pay rebates if their overhead is too high. Yet, unless the White House intervenes, the law could actually penalize them for spending all these extra funds, which were in reality, a chain reaction to the tumultuous Healthcare.gov rollout.

Give Us Some Slack

So, while Insurers and the Administration have the same goal: to get people, especially healthy people, to enroll in the ACA’s new marketplace — Insurers have been frustrated by policy changes that keep pressing them to compensate for the website’s woes.

One option: cutting Insurers slack on these spending caps might be the ideal means for the White House to mend its frayed relationship with the industry. The down side: that means the Administration would be softening on part of the healthcare law that it has tried hard to sell politically.