The human mind recoils at the sheer amount of money the Obama administration has wasted. Surely, never in history have a people spent so much and gotten so little in return.
What will be the next colossal waste of taxpayer money backed by the Obama administration? Well, of course, says Charles Kauthammer, it’s only a matter of time before the administration will want to bail out the health insurance industry, which, after all, is being wrecked by ObamaCare.
What should Republicans do this time?
First order of business for the returning Congress: The No Bailout for Insurance Companies Act of 2014.
Make it one line long: “Sections 1341 and 1342 of the Affordable Care Act are hereby repealed.”
End of bill. End of bailout. End of story.
But is Krauthammer right? Would the administration call for something as outrageous as an insurance industry bailout? Krauthammer recalls that on December 18, the chairman of the Council of Economic Advisers was asked if there is a Plan B in case ObamaCare forces the insurance companies into financial difficulties. Jason Furman, chairman of the Council, would only say that there is a Plan A—that healthy, young people signing up is the plan.
But of course there’s a Plan B. It’s a government bailout.
Administration officials can’t say it for political reasons. And they don’t have to say it because it’s already in the Affordable Care Act, buried deep.
The key is Section 1342 of the Affordable Care Act, the “risk corridor” provision that makes a payout of up to 80 percent of losses by the insurance companies mandatory. Section 1341 also established a “reinsurance” fund that collects $20 billion over three years to make up for losses.
It was easy, notes Krauthammer, to overlook such provisions in a bill so long and complex that it was not read even by the people who voted it in to law. But for those in the insurance industry—and I’ll bet their lobbyists did read the law!—these provisions were essential. I’ll bet they wouldn’t have gotten in bed with the Obama administration to foist this monstrosity on the public without these provisions!
Still, as risky as the ObamaCare scheme was, the administration has made it even more dangerous for the insurance industry by making things up as we go along. The employer mandate was postponed and HHS Secretary Kathleen Sebelius has “urged” insurers to cover drugs and services they don’t actually cover post-Affordable Care advent during the “transition” period. These changes will cost the industry dearly.
The insurers were stunned. Told to give free coverage. Deprived of their best customers. Forced to offer stripped-down “catastrophic” plans to over-30 clients (contrary to the law). These dictates, complained their spokesman, could “destabilize” the insurance market.
Translation: How are we going to survive this? Shrinking revenues and rising costs could bring on the “death spiral” — an unbalanced patient pool forcing huge premium increases (to restore revenue) that would further unbalance the patient pool as the young and healthy drop out.
End result? Insolvency — before which the insurance companies will pull out of Obamacare.
Solution? A huge government bailout. It’s Obamacare’s escape hatch. And — surprise, surprise — it’s already baked into the law.
The Republicans have an opportunity, if they are smart, to stop this bailout. Krauthammer suggests gilding the lily by attaching the debt ceiling to this bill and seeing if the president is willing to let the country go into default to provide massive subsidies for an industry that the president has spent a lot of time and energy demonizing.