ObamaCare’s bailout for health insurers
A little known, but important, provision in the Affordable Care Act, or ACA, is turning into a major point of contention between some policymakers and insurers participating in the ObamaCare exchanges. The ACA includes provisions to pay insurers for their financial losses in the ObamaCare exchanges. In response to lawmaker and public pressure, the federal...
A little known, but important, provision in the Affordable Care Act, or ACA, is turning into a major point of contention between some policymakers and insurers participating in the ObamaCare exchanges.
The ACA includes provisions to pay insurers for their financial losses in the ObamaCare exchanges. In response to lawmaker and public pressure, the federal government is proposing to limit the bailouts that the insurers would be eligible to receive if they lost money because health insurance premiums weren’t sufficient to cover medical claims.
The Centers for Medicare and Medicaid Services, or CMS, is now proposing to make these “risk corridor payments” budget neutral beginning in 2015. Today, money is pooled from each insurer and added to tax revenue from a new tax on health insurance plans. Starting in 2015, bailouts would be limited to the amount of money available from insurers and the health-plan tax pool of money. Additional bailouts – no matter the magnitude of insurer losses – could not be paid from other sources.
In a not-so-surprising development, a major health-insurance trade association and the Blue Cross and Blue Shield Association are opposing the proposed federal rule. Through risk corridor payments, health insurance companies could receive bailouts of up to 80 percent of the money that they lose in the ObamaCare health insurance exchanges.
If the government yields to their protests, the same Americans who are having their health insurance policies canceled as a direct result of ObamaCare and who are being forced to pay more for their coverage could foot the bill for a potential bailout of the ObamaCare insurers.
The ObamaCare enrollment numbers make the prospect of some level of a bailout all but certain. The “young invincibles” – people ages 18-34 –make up just 28 percent of the total enrollments. (It is unclear how many of those young people have actually paid for a plan, because the Obama administration counted anyone who put a plan in their shopping cart even if they didn’t “checkout.”)Even if all of these young people actually pay for their selected plans, thereby obtaining coverage, that is far short of the 38 percent target the administration needs to balance out the older and sicker patients in the insurance risk pool. Without a sufficient pool of young invincibles, heavy insurer losses are all but certain.
Legislative proposals, such as the “Obamacare Taxpayer Bailout Prevention Act” and the “No Bailouts for Insurance Industry Act of 2014” provide an important opportunity to remind taxpayers of the true cost of the misnamed “Affordable Care Act.”ObamaCare is not affordable and is doing the opposite of its promised goals.
This issue is yet one more reason why it is time to go back to the drawing board to craft solutions that give individuals control, rather than giving federal bureaucrats and the health insurance lobby authority over health-care decisions. Allowing citizens to select options that best meet their own needs and preferences, rather than government-knows-best dictates, should be the primary goal of restoring health care affordability to the nation’s health-care system.