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November 23 2015

ObamaCare Bailout for Insurers?

Patrice J. Lee

Is ObamaCare too big to fail? The Administration thinks so.

President Obama’s legacy is coming apart at the seams with the latest news that United Healthcare Group is seriously considering pulling out of ObamaCare because the Administration has failed to lure (young) healthy Americans onto ObamaCare plans. ObamaCare policy holders tend to be sicker than expected and thus to rack up higher costs. There are not enough healthy people paying into the system to offset those costs.

The loss to insurers has been significant so far and they realize that it’s not feasible to remain in this money-losing system - especially as enrollment in the system doesn’t appear to be getting much better.

In response, the Administration is holding out a carrot to keep insurers on board. The Department of Health and Human Services (HHS) reassured private insurers that they’ll be able to recover their losses and claiming it is the “obligation” of the American government to bail them out.

The Centers for Medicare and Medicaid Services (CMS) proposed a new rule to help stabilize the faltering ObamaCare marketplace. HHS would use money collected from insurers in 2015 and possibly next year to make up the $2.5 billion shortfall in 2014.

Let's think about that for a minute. If the Administration is borrowing from next year's expected profits, what guarantee is there that that will even exist? And how irresponsible is it to spend what you haven’t already earned? Only the government gets away with such tactics.

The insurers are firing back by making noise and now it appears that they will be getting their way. The Washington Examiner explains:

At issue is a provision within the law known as the risk corridors program... The idea was to provide training wheels to insurers in the first years of Obamacare's implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.

Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year's spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.

Now that insurers have been able to look at medical claims, what they've found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they're owed.

So insurers are not happy. And now the industry lobbying group America's Health Insurance Plans — which happens to be helmed by Marilyn Tavenner, who previously oversaw the implementation of ObamaCare as head of the Centers for Medicare and Medicaid Services — is aggressively fighting for more money.

In a statement issued Thursday, the same day that the nation's largest insurer, UnitedHealth announced it may exit Obamacare, Tavenner said, "... When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result. The administration must act to ensure this program works as intended and consumers are protected."

Since when did ensuring that healthcare companies make a profit become our obligation?

Crony capitalism is on full display here as the American Thinker notes. The big insurers got on board with President Obama's healthcare reform effort despite the fact that it was done with no public input, because they thought the deal with be a windfall for them in the form of millions of new customers. That back-fired (as all of those customers are sick) and now they want some money back:

The deal was thus presented to them as a no-lose proposition that would expand the market for their products by forcing consumers to buy them on pain of hefty fines (later redefined as “taxes” by Chief Justice Roberts).  Big Health Insurance mobilized its lobbying might in favor of Obamacare, and it passed (unlike HillaryCare, which the insurance industry was able to kill with its devastating “Harry and Louise” television ads.

...

The industry lobbied for guaranteed crony capitalist profits, and now the scheme is falling apart.  So HHS starts spinning and is telling us we have an open-ended “obligation” to ensure profits for the crony capitalists who sought the very ill-designed bill, and who employ the designer of the bill.

Caught in the middle of this fighting between insurers and the Administration are Americans who legitimately thought ObamaCare would solve their healthcare coverage problems.

As we maintain, our healthcare system was in need of reform before ObamaCare, but what we got was neither affordable access to quality care nor the reforms that put patients in the driver's seat. Rather, government seized a sixth of our economy,  interposing itself between doctors and patients, causing millions of Americans to have their coverage cancelled, while other struggle to afford higher premiums. And we tax payers should foot the bill for government playing doctor?

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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