The Republican party got something it wanted in the budget passed by Congress: a reduction in the amount of funds that will be available to insurers as loss offsets for insurers selling health plans via the public exchanges. But they may have widened a rift between not only the insurance vendors, but their investors as well.
Why the investors? Because Moody's has signaled that the risk corridor fund limits included in the new budget represent a credit negative for those insurers doing business on the public exchanges.
"The $1.1 trillion government spending bill that Congress passed this past weekend includes a provision that weakens the protection provided by the risk corridor program under the Affordable Care Act. The provision is credit negative for health insurers because it risks limiting what the US Department of Health and Human Services can distribute to insurers that incur losses from policies sold on the health insurance exchanges," Moody's said. "With many insurers projecting losses on this business, the provision will reduce the amount of funds that companies expected to receive for polices sold on the exchanges in 2014 and 2015."
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