Nov 30, 2016
Taxpayers, Take Note of Obamacare Bailout Price Tag
Post by Geoff Holtzman
If you unplugged during Thanksgiving, you may have missed the news that insurers have asked for an additional $6 billion dollars through an Obamacare program known as Risk Corridors, a temporary, three-year program that is set to expire at the end of this year.
The risk corridors program was designed as part of Obamacare to protect health insurance companies from extreme losses and gains on health care plans offered on the exchanges during the first few years. These extreme losses or gains occur when insurance companies massively overprice or underprice the plans offered. HHS collects dollars from plans making a profit and shares with those plans that are having losses due to mispricing. The program was supposed to be fully funded by these plans offered by insurers.
But the reality of the situation got ugly quick. New numbers from Health and Human Services (HHS) show that the Risk Corridors program is running large deficits due to the fact that insurers who sell individual policies on Obamacare’s exchanges are hemorrhaging money. According to Brian Blase, the total deficit for the 2014 and 2015 risk corridors program amounts to around $8.3 billion.
Insurers requested nearly $6 billion dollars from the program for 2015. Last week, Centers for Medicare & Medicaid Services (CMS) announced that any money collected in 2015 would be used toward the 2014 risk corridor payments. In 2014, insurers requested $2.8 billion but received only 12 percent of that because Obamacare was significantly less profitable than expected. As a result, insurers are currently suing the government for billions they claim to be owed, and the Obama administration is reportedly considering using taxpayer dollars to bail them out.
These claims are further indications of the law’s failure by its own standards. Now, the Obama administration is trying to force taxpayers to pay for these bailouts—a move that is explicitly illegal. According to Freedom Partners Senior Policy Advisor Nathan Nascimento:
“Twice Congress has required that the administration operate the risk corridors program as the law directs: free of any taxpayer funding, meaning that if CMS doesn’t collect adequate money from insurers as it was intended from the beginning, the administration has no authority to raid any taxpayer funds—And they certainly don’t have the authority to circumvent congress for a sue and settle scheme.”
Only several weeks after voters sent a message that Washington needs to change, the Obama administration is trying to force more of the same corporate welfare during its final days. Congress must remain vigilant, hold the current administration accountable and prevent any illegal or unauthorized bailout of insurance companies.