Ever since the housing market collapse, nothing stokes the flames of public outrage quite like the phrase "government bailout." It's become the condemnation of choice for both parties when faced with a policy they don't like. Lately, conservatives have been arguing that an obscure provision of the 2010
The specific provision is called "risk corridors," and it's one of three efforts in the Affordable Care Act to help insurers manage the transition from the bad old days — when they could deny coverage to people or charge them higher rates based on their preexisting conditions — to a new system under which every applicant is guaranteed coverage and premiums don't vary according to the policyholder's health. That's a huge leap for insurers, which may have a hard time predicting their future customers' health and medical bills accurately enough to set sufficient rates. That's why the government set up the corridors for three years, covering some of an insurer's cost if its medical bills come in higher than projected. And to offset that expense, the government will collect an equal percentage of the profits made by an insurer whose medical payments turn out to be lower than projected.
When Medicare asked insurers to start offering prescription drug coverage, the same mechanism was included for much the same reason: The government was pushing insurers to take on a new risk that they weren't fully ready to gauge. Over time the government withdrew its backstop, leaving insurers to deal with the challenges increasingly on their own. Based on that experience, the