Insurers Expect a Nearly $1 Billion Bailout under Obamacare

Obamacare by from The Weekly Standard, June 27, 2014

Most Americans don’t think it’s their job to bail out insurance companies who lose money under Obamacare, but that’s exactly what’s poised to happen. Obamacare’s risk-corridor program—which President Obama has been using as a slush fund to placate his insurance allies and keep them quiet about his lawlessness—shifts financial risk from insurers to taxpayers. According to the House Oversight Committee, health insurers expect Obamacare’s risk corridors to net them nearly $1 billion, at taxpayer expense, this year alone.

Obamacare’s risk-corridor program is designed to redistribute money in the Obamacare exchanges, from health insurers who make money to those who lose money. But the Obama administration pressured insurers to set rates as low as possible despite Obamacare’s myriad mandates that have driven actual insurance costs up dramatically. Knowing that the risk-corridor program was in place, insurers willingly played ball with the administration, figuring that even if they lost money, they’d still find money—through this helpful program. It was a win-win that would boost Obamacare in its early days—to the benefit of those who’ve gained extraordinary power at the expense of Americans’ liberty, and of those whose product has become mandatory for Americans to purchase.

The Obama administration claims that the risk-corridor program will be budget-neutral—that is, that it won’t cost taxpayers money—and the Congressional Budget Office (taking the administration at its word) has echoed that assessment. The House Oversight Committee, however, asked 15 insurance companies whether they expected to be paying money into the risk-corridor program this year or taking money out of it. One company said it expected to be paying money in, 12 said they expected to be taking money out, and two said they expected it to be a wash. The committee also asked 23 insurance co-ops the same question:  two expected to be paying in, seven expected to be taking out, and 14 expected it to be a wash. Collectively, these insurers and co-ops expected to take out $725 million more than they expected to put in. Guess who’ll get the tab?

The Oversight Committee estimates that these 15 insurers and 23 co-ops cover roughly 80 percent of those who bought insurance through the Obamacare exchanges. That still leaves another roughly 20 percent who are covered by other insurers or co-ops. If those insurers or co-ops are expecting taxpayer handouts at the same rate as the ones who have already shared their expectations with Congress, then that $725 million tab would rise to about $900 million—nearly a billion dollars that would be funneled from taxpayers, through Washington, to insurers.

Recent polling by McLaughlin & Associates for the 2017 Project asked, “If private insurance companies lose money selling health insurance under Obamacare, should taxpayers help cover their losses?” By a tally of 81 to 10 percent, respondents said no. Nor was this a Republican-heavy poll—it included 38 percent Democrats and just 31 percent Republicans.

The House of Representatives has a great opportunity to go after Obamacare’s risk-corridor program. Then if the Senate fails to follow suit, Harry Reid and company can explain why they think Main Street Americans should help cover the losses of Obama’s insurance-company allies.

© 2014 Weekly Standard LLC. Reprinted with permission.