The lead actor is Senator Marco Rubio (R-FLA), but other Republican Senators signed on.
When the ACA was rolled out, telling insurance companies that they had to insure anybody who signed up, regardless of previous conditions or sickness, everybody realized that the insurance companies would probably lose money in the first decade or so, until previously-uninsured-but-sick people got into the system, got better, and things evened out.
To get the insurance companies to go along with this danger of losing money, the ACA promised to make them whole for any losses in any of the first decade’s years. At the end of each fiscal year, the insurance companies merely had to document their losses, and the government would reimburse them out of ACA funds provided for by the law.
The possibility of their losing money was referred to as the “risk corridor,” and the ACA explicitly filled those risk corridors with a guarantee of making the insurance companies, at the very least, whole.
And then something happened. As The New York Times noted on December 9, 2015, “A little-noticed health care provision slipped into a giant spending law last year has tangled up the Obama administration, sent tremors through health insurance markets and rattled confidence in the durability of President Obama’s signature health law.”
Rubio and a number of other Republicans had succeeded in gutting the risk corridors. The result was that, just in 2015, end-of-fiscal-year risk corridor payments to insurance companies that were supposed to total around $2.9 billion were only reimbursed, according to Rubio himself quoted in the Times, to the tune of around $400 million. Rubio bragged that he’d “saved taxpayers $2.5 billion.”
Robert Pear wrote the New York Times article o December 9, 2015: Marco Rubio Quietly Undermines Affordable Care Act. Pear has been on the health care / health insurance beat for over twenty years.
What struck me (forcefully) about Pear's article (emphasis added):
Like many other observers of the health law, the Obama administration initially failed to appreciate the impact of the Rubio restrictions. Kevin J. Counihan, the chief executive of the federal insurance marketplace, told state officials in July that money collected from insurance companies would be “sufficient to pay for all risk corridor payments.” More recently, the administration consoled insurers by telling them that it would make additional risk corridor payments from money collected in 2015 and 2016.
Frankly I was entirely unaware of either the risk corridor issue (and making insurance companies whole) or the Rubio-led drive to cripple ACA by gutting the promised payments. The Wall Street Journal published an explainer, Explaining ‘Risk Corridors,’ The Next Obamacare Issue, in January 2014.
To one side, it’s a massive bailout of insurance companies that could cost taxpayers billions of dollars. To the other, it’s an important protection for consumers that might not cost anything.
In case you are as confused as I am, The Kaiser Family Foundation (KFF) published Explaining Health Care Reform: Risk Adjustment, Reinsurance, and Risk Corridors on August 17, 2016.
The ACA’s risk adjustment, reinsurance, and risk corridors programs were intended to protect against the negative effects of adverse selection and risk selection, and also work to stabilize premiums, particularly during the initial years of ACA implementation. Each program varies by the types of plans that participate, the level of government responsible for oversight, the criteria for charges and payments, the sources of funds, and the duration of the program. The table below outlines the basic characteristics of each program.
This is not the only way the GOP undermined the success of the ACA -- the refusal of some Republican governors to expand Medicaid also played a role -- but it was a particularly insidious one.