By Harry Nelson, Nelson Hardiman Law Firm In early October, health plans around the country received the news:  The government anticipated an estimated shortfall in excess of $2.4 billion in the risk corridor program that was intended to subsidize losses for care for expensive new patients brought in by the Affordable Care Act (ACA).  In the wake of an 87% shortfall from the promised subsidies, 11 health cooperatives around the country have folded or announced plans to close, according to an article in The Wall Street Journal. Others are threatening to follow suit.  The shortfall is a blow particularly to health cooperatives and smaller health plans around the country, which were depending on the risk-sharing initiative for protection against losses on the subsidized insurance exchanges. The problem facing health plans that certified to participate in the insurance exchanges was that they would be issuing coverage to patients with guaranteed issue irrespective of preexisting conditions, without using past medical history to underwrite limits.  The influx of millions of previously uninsured patients, many with untreated conditions, threatened to present new, unknown claims patterns.  The risk corridors would enable plans to hold prices down to ensure affordability for the newly insured, and take on risk gradually.  For three years (2014 to 2016), highly profitable plans would pay in and subsidize plans that lost money and needed support.  The calculation measured various plans by comparing the premiums collected against each plan’s allowable costs (claims and other costs) against the insurer’s “target amount”—its premiums minus administrative expenses, including profit. Read more at Managed Healthcare Executive.