Section 1342 established risk corridors for the 2014, 2015, and 2016 calendar years. It applies to individual or small group health insurance plans. Basically, the federal government uses risk corridors to redistribute money from health insurance exchange plans that earned profits to those that lost money. If the ratio of healthcare costs billed exceeds the plan’s total annual premiums, the health insurance company is compensated by the federal government for up to 80 percent of the losses through the risk corridor.
By repealing this section of the law, the Administration — specifically the Department of Health and Human Services (HHS) — would have to request appropriations from Congress to cover any losses in the risk corridors.