FRONT PAGE CONTRIBUTOR
The ObamaCare insurance industry bailout warms up on its launch pad
It’s the bailout none dare speak of, the bailout we’re not even supposed to refer to as a “bailout.” No, no, you’re just fearmongering by using that term! Instead, you must talk about “risk corridors.” A risk corridor is a passageway wide enough to accommodate a few billion dollars of bailout money. If you think of the boulder that almost crushed Indiana Jones at the beginning of “Raiders of the Lost Ark” as a bailout, the hole it emerged from was a risk corridor.
King Barack I is getting ready to rewrite the Affordable Care Act again, having satisfied himself that no one in America can compel him to respect the law he insists all others must obey. The next illegal rewrite is going to make those “risk corridors” quite a bit wider, which might leave some ObamaCare apologists chewing on their own toes. The Washington Examiner explains the situation:
The risk corridor program was written into the 2,700-page health care bill to help the insurance companies offset losses if they enroll too few healthy customers and sign up too many people with high health care costs.
Risk corridors are aimed at keeping premiums from skyrocketing by requiring the government to “share in the risk associated with the new marketplace,” according to the health care lobbying group America’s Health Insurance Plans (AHIP).
Insurance companies pay into a pool to cover losses for companies that fare poorly but the federal government must step in if there is widespread loss, which some say could happen due to the lack of participation on the health care exchanges from young and healthy individuals.
Because asking our money-printing, heavily indebted government to “share in the risk associated with a marketplace” worked out so very well with subprime mortgages. Everyone’s super happy with how that shook out, right? Clearly it’s something America needed more of, because every industry behaves more responsibly when it thinks it has a pipeline directly into the unlimited federal treasury.
So contrary to all those breezy assurances from ObamaCare apologists that “risk corridors” are not a bailout delivery system, no way, no how, nuh uh… that turns out to be exactly what they are, and the incoming bailout is vastly larger than any of the con artists who wrote the Affordable Care Act anticipated, partly because of all those politically motivated changes King Barack has been making:
The disastrous rollout of the law resulted in millions of people on the individual market losing health care policies that did not include the “essential benefits” required under the new health care law, including maternity care and pediatric dentistry. The resulting public outcry prompted President Obama on Nov. 14 to announce that health insurance companies could allow customers to keep their old plans for an extra year.
The Obama Administration is now weighing a plan to grant an additional three-year extension for non-complaint plans on the individual market. Such a move would prevent millions of people from losing their policies in the critical weeks and months before the 2014 election.
But it would also allow people on the individual market to keep non-compliant plans beyond the risk corridor’s 2016 expiration date, leaving health insurance companies serving the exchange vulnerable to financial losses as the more healthy customers continue to stay out of the exchanges.
Health insurance companies are looking for something in exchange for the three-year extension, which will make it much harder for them to sign up healthier and younger customers. Extending the risk corridor program is part of that conversation with the White House, industry sources said.
I would quibble with the first sentence of that analysis, because it’s not the “disastrous rollout” of ObamaCare killing all those insurance plans. That’s what ObamaCare was designed to do. As we’ve learned, the White House was well aware this was coming, even as Barack Obama rattled off the biggest lie in modern history, over and over again. The “disastrous rollout” was responsible for a significant portion of the very modest Affordable Care Act customer base having trouble signing up for replacement plans in time for 2014 coverage. Very few people who lacked insurance before ObamaCare have shown any interest in buying an ACA policy; the vast majority of customers have been the people Obama falsely promised would be able to keep their plans.
The weak enrollment numbers for ObamaCare, and the political disaster of letting the job-killing employer mandate go fully into effect during an election season, gave us these illegal delays, which suddenly oblige the lousy Affordable Care Act policies to compete with far superior pre-ObamaCare plans. They can’t win that competition – especially among the younger, healthier customers ObamaCare needs to fleece. Premiums will go up even more, creating even further resistance to signing up for ObamaCare; Young Invincibles will increasingly take the option no American citizen should ever have been forced to consider, and pay the individual mandate tax to escape from the system. The insurance industry is going to take a bath. They’ll expect Obama to draft an army of tax serfs to pull them out of that bathtub.
Amusingly, ObamaCare’s desperate defenders are trying to pretend their failed boondoggle bears some resemblance to other programs, in order to keep anti-bailout sentiment under control until it’s time to raid the Treasury:
Health care law supporters point out that the federal government can make money off risk corridor programs. A Congressional Budget Office report last week predicted the federal government won’t lose a dime through the risk corridor program but will end up netting $8 billion.
The CBO based its estimate on the performance of risk corridors established under the Medicare Part D prescription drug benefit program passed by a Republican-led Congress and signed into law by President Bush in 2003.
“The risk corridor program was a good idea during the Bush administration, and it worked,” Rep. Elijah Cummings, D-Md., said during a recent hearing on the program. “Rather than a bailout for insurance companies, the program has resulted in $7 billion in net gains to taxpayers. But now since these same mechanisms are part of the Affordable Care Act, Republicans argue that they are a bailout for insurance companies.”
Sure, ObamaCare is just like Medicare Part D. Young and healthy people who were supposed to provide the funding muscle for Medicare took a pass on enrolling in the program because it was too expensive, leaving insurance providers with an unexpectedly huge burden of older and sicker beneficiaries? Does anyone remember George Bush violating the Constitution to rewrite Medicare on the fly, granting special waivers that delayed full implementation of the program for years?
The primary limiting factor on the financial jeopardy posed by the risk corridors was their temporary nature. Insurance companies wanted a little taxpayer-financed security to control catastrophic losses, but if the Affordable Care Act worked within projections, the losses would be acceptable for a few years, and then all that lovely mandated commerce would give insurance companies a government-guaranteed payoff. That’s why they were on board with ObamaCare in the first place. The prospect of a captive customer base was very enticing.
But nothing about the ACA is working within projections. We’re barely a third of the way to the Year One enrollment goals, with only a few weeks to go. Obama keeps changing the law, granting that captive customer base years of parole. Credit rating agencies are thinking of downgrading the insurance industry outlook again, partially due to the insecurity of King Barack’s arbitrary rule. And let’s not forget that health care costs have been kept under control for a few years, not by ObamaCare, but by King Barack’s lousy economy. If the economy picks up, those costs are going to explode.
Higher premiums accompanied by higher taxpayer subsidies, using a terrorized base of captive citizens as pipelines into the Treasury… or a more traditional Big Government cash bailout pumped through the risk corridors. One way or the other, we will be forced to keep the insurance industry afloat. That was the pact they made through the Affordable Care Act. The American people just have to be kept in the dark a bit longer, until the trap can be sprung, and they’re told opposition to a bailout will mean the end of medicine. The insurance industry is now government-certified as Too Big To Fail, until such time as the statists think they can push single-payer socialized medicine through.