The Obamacare ‘Bailout’ Of Insurers Will Be Financed By A New Tax On Everyone’s Health Plan Get Ready Nobamacare Fans Scott Gottlieb | Forbes June 19, 2014
For months, there have been assertions that the mechanisms embedded in Obamacare, designed to offset losses that insurance companies will take this year on their exchange business, amount to a bailout of the insurance industry. At the same time, it wasn’t clear where the money to pay for these “risk adjustments” would come from in the first place. One scheme had the Obama Administration using money that it clawed away from profitable health plans to offset the losses incurred by the less fortunate insurers. This, at least, was the way the so-called “risk corridors” were supposed to work, according to the original legislation. Problem is, it’s not clear that there will be enough health plans this year (or any at all) with excess profits that could be used to offset the losses incurred by insurers who were less fortunate. Another scheme — the one that gave influence to the specter of a bailout– had the Obama team using taxpayer funds to directly offset the losses taken by exchange health plans. This approach had obstacles as well. Chief among them is that the money for the bailout doesn’t exist. It was never set aside.
Even if the Obama team tried to re-program slush funds that it surfaced inside the Department of Health and Human Services, a recent analysis by the Congressional Research Service makes clear that first, Congress would have to separately appropriate the funds in order for any money to be spent on the Obamacare plans. Now we know where the “bailout” money is going to come from. It will be paid for by a new tax levied on the insurance companies. Mandy Cohen, the Acting Administrator of the Centers for Medicare and Medicare Service’s Center for Consumer Information and Insurance Oversight, delivered that message yesterday. Cohen was testifying before the House Subcommittee on Economic Growth, Job Creation and Regulatory Affairs. She said that if funding for the risk corridors can’t be financed off the money that gets clawed away from profitable insurers (therefore allowing the entire scheme to remain budget neutral) then CMS has the authority, if not the intention to impose additional “user fees” on all health insurers to cover the higher losses experienced by the Obamacare plans. At issue is what’s being referred to as the “three R’s.” These are Obamacare policy constructs that are designed to offset losses that insurers will take as a result of the mostly older, and less healthy mix of patients that enrolled in the exchanges. These three R’s include: A reinsurance fund of about $25 billion (financed off a fee on commercial insurance plans) that compensate health plans that enroll a costlier pool of patients; “Risk corridors” that substantially limit insurance company losses by shifting these costs to taxpayers; and Risk adjustment that balances health plans that enroll a disproportionate share of costlier patients. The money drawn off the newly proposed user fees (tax) would be used to finance the risk corridors. This scheme is largely aimed at shifting money between insurers that lost excessive amounts of money, and those that were profitable. Problem is, almost everyone lost money. Few if any Obamacare plans had excess profits this year, owing to the rocky rollout. So there isn’t any money to shift around — absent, of course, some new
cash infusion. That’s where the user fee comes into play. Since Obamacare health plans were prevented from pricing products to reflect true risk, they were always going to have atypically high cost, and in turn, losses. The red ink was inevitable. Now all of us will be forced to pay for it, whether we have an Obamacare plan or not. That new tax will be passed onto everyone in the form of higher premiums.
GOP Lawmakers: Get Ready For The $1 Billion Obamacare Insurance Bailout by Sam Rolley June 19, 2014 The chairman of the House Economic Growth, Job Creation and Regulatory Affairs subcommittee said Wednesday that taxpayers could end up bailing out insurance companies to the tune of $1 billion as a result of Obamacare. The bailout, argued Representative Jim Jordan (R-Ohio), will result from a revenue-sharing program set up under Obamacare called the Temporary Risk Corridors Program. Jordan’s assertions run counter to previous Congressional Budget Office report that said the program would cost the government nothing. “The American people have a right to know how much these backdoor bailouts will cost,” Jordan said. “While I have great respect for the analysts at CBO, their findings in this area did not square with the evidence presented by numerous health policy experts.” The revenue-sharing is intended to offset insurer costs during the early stages of Obamacare implementation by distributing funds from insurers with healthier patients to those insuring higher numbers of older, sicklier patients.
Jordan told fellow lawmakers that, according to research involving 23 Obamacare co-op insurers and 15 traditional insurance providers, his committee estimates that the more than $730 million will be paid out to struggling insurers. “The information provided by the insurers suggests that the total taxpayer bailout could well exceed $1 billion this year alone,” he said. Republicans have previously attacked the risk corridor as being unlawful, based on opinions from the Government accountability Office and Congressional Research Service. “Under current law, payments made under the risk corridor program would constitute an unlawful transfer of potentially billions of taxpayer dollars to insurers offering qualified health plans under the President’s health care law,” wrote Representative Fred Upton (R-Mich.) and Senator Jeff Sessions (RAla.) in a recent letter to new Health and Human Services Secretary Sylvia Burwell. The lawmakers’ contention stems from a statement in the Administration’s 2015 fiscal year budget calling for the corridor funds to be moved through the Centers for Medicare and Medicaid Services. Sessions and Upton contend that Congress should hold the sole authority to authorize the funds. “Without an explicit appropriation, any money spent on the risk corridor program would be based on an illegal transfer of funds and your agency could be held in violation of the Antideficiency Act,” the lawmakers said. Get Ready for the Obamacare Bailout of Insurance Corporations VIDEO BELOW http://www.youtube.com/watch?v=5MBS41Eb-T8 Obamacare Bailout! Not Taxpayers' Responsibility to Bail Out Obamacare !! VIDEO BELOW http://www.youtube.com/watch?v=yhuPlK5zNQs
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