January 7, 2014

Charles Krauthammer speciously described the reinsurance and risk-corridor provisions in the Affordable Care Act as a health insurer “bailout” [“Stop the bailout — now,” op-ed, Jan. 3].

The health-care law requires health plans to contribute to a reinsurance fund. This fund provides payments to insurers that face catastrophic expenditures because they enrolled disproportionately sicker, more expensive patients. The law also establishes risk corridors, imposing limits on the losses borne by health plans. The risk corridors are underwritten by restrictions on health-plan profits. Such risk-adjustment techniques guarantee that the insurance industry is not lavished with windfalls and protect patients from insurers that otherwise would have financial incentives to avoid insuring the sick and elderly.

Risk adjustment has been commonplace. President George W. Bush included it in Medicare Advantage and the prescription drug benefit he created in 2003. In these programs, private insurers manage the health benefits of Medicare beneficiaries and are reimbursed in a risk-adjusted fashion similar to the Affordable Care Act. Did Mr. Krauthammer disparage risk adjustment as an insurer bailout when a Republican president and Congress advocated for and adopted it a decade ago?

Nathan Punwani, Washington

The writer served on the board of the American Medical Association’s political action committee from 2010 to 2012.

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