Oct 26, 2016

ICYMI: President Obama’s Strategy to Save ObamaCare is Illegal — and Could Cost Taxpayers Billions

Post by Geoff Holtzman

In Case You Missed It

President Obama’s Strategy To Save ObamaCare Is Illegal — And Could Cost Taxpayers Billions

With Health Care Premiums Exploding, Americans Shouldn’t Be Forced To Send a Single Penny More to Bandage the President’s ObamaCare Debacle

Andy Koenig Forbes

With nearly a third of all U.S. counties expected to have just one insurer on the ObamaCare exchanges in 2017, President Obama knows that health care choices are disappearing as insurers continue to abandon the marketplace. In order to prop up his signature law, the president may exit office with a legally questionable bailout at great cost to taxpayers.

Rather than appealing to Congress for money, indications suggest the Obama administration may resort to a ‘sue-and-settle’ strategy, essentially agreeing to insurers’ recent demands that the government pay them billions in the form of taxpayer bailouts.

Here’s the backstory: Earlier this year, several insurers sued the federal government because they had not received the funds they believe were promised through ObamaCare’s ‘risk corridors’ program. The law’s risk corridors provision is a temporary program that expires this year. It was designed to divvy up gains among profitable insurers to less profitable ones so that insurers that sold low-cost plans to high-cost patients didn’t lose massive sums.

Hoping that ObamaCare would be a cash cow, many insurers initially flocked to the exchanges. Now, so few have been profitable that there’s been a massive gap between the money requested and the money received – to the tune of $5 to $15 billion in 2014 and 2015. As a result, over 40 insurers have exited the exchanges in the past two years.

The administration is getting desperate to keep insurers on the exchanges. Since the law required the risk corridors program to remain revenue neutral – meaning that it could not dip into taxpayer funds – insurance companies have only recovered 12.6 percent of the money they anticipated receiving in 2014 – and the losses are estimated to be larger for 2015 and 2016. 

Now, a handful of insurers, led by a defunct Oregon health care co-op, have sued the federal government for the money the Obama administration wrongly promised and now can’t deliver.

And that’s where the sue-and-settle strategy comes in.

Click here to read the full op-ed at Forbes