To: Interested Parties
From: Heritage Action for America
Date: October 18, 2016
Subject: How Congress Can Stop the Impending Obamacare Bailouts
There is widespread agreement that Obamacare is on the verge of collapse, and while that should prompt calls for full repeal, the reality is that many in Washington are instead contemplating how the law can be propped up. Much of this will play out in 2017 and beyond with a new administration and a new Congress, but some of it will come to a head in the last two months of 2016. In fact, a multi-pronged taxpayer bailout of Obamacare could be in the works. Fortunately, Congress can take three relatively easy steps to stop this from happening. It needs to 1) allow temporary programs to expire as scheduled; 2) reassert current law that has previously been signed by President Obama, and 3) block illegal payments.
When setting up the Obamacare exchanges, three “risk mitigation” (read: bailout) provisions were written into the law to incentivize large health insurance companies to participate in the government takeover of our healthcare industry. The three bailouts are known as the risk corridors, reinsurance, and cost-sharing subsidies. Despite these cronyist “risk mitigations” for big business, Obamacare has been an unmitigated disaster for the average citizen’s health plans and tax dollars. In fact, due to these bailout options, some of the worst fiscal consequences for the taxpayers are potentially yet to come.
As The Heritage Foundation explained last year, the reinsurance program funneled nearly $8 billion to Obamacare insurers in 2014, paid for “by a tax on everyone with non-Obamacare coverage.” Highlighting the problems with the reinsurance bailout provision, Chris Jacobs at National Review writes:
Today, conservative leaders sent a letter to House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell urging them to continue the policy contained in recent appropriations bills restricting the use of Obamacare’s “Risk Corridor” program:
As you begin negotiations over legislation to continue government funding past December 11, 2015, we the undersigned individuals and organizations urge you to continue the policy contained in recent appropriations bills restricting the use of Obamacare’s “Risk Corridor” program.
Many of us signed on to a letter last year describing the Risk Corridor program (Sec. 1342 of the Patient Protection and Affordable Care Act, better known as “Obamacare”) in detail and outlining why we believed it was important to restrict its ability to serve as a “taxpayer bailout” for Obamacare participating insurance companies. Fortunately, Congress was able to insert such language into the last omnibus appropriations act (specifically Division G, Title II, Sec. 227 of P.L. 113-235).
In last year’s letter, we pointed out that the experience of insurers in the new exchanges would likely lead to them demanding much more in returns from the program than they were putting into it. That prediction has turned out to be true. On October 1, the Department of Health and Human Services (HHS) announced that they would only be able to pay out $362 million of the requested $2.9 billion, or just 12.6%, of funds that Obamacare-participating insurers had requested. Absent the Sec. 227 language mentioned above, HHS may very well have simply filtered the difference of $2.538 billion from hardworking taxpayers to bailout insurers for their poor business decisions.
You can read the full letter here.
They say it’s better to ask forgiveness than permission. Well, with the passage of Obamacare, the left didn’t really ask for permission or forgiveness. They just made lots of promises they didn’t intend to keep, and then the kind of acknowledged that maybe they overstated the benefits of the Affordable Care Act. To them, it’s still awesome and “beautiful.”
If you’re still wondering whether Obamacare has lowered health care premiums, Chris Jacobs has the scoop in his latest WSJ Think Tank blog post:
[D]uring the 2008 presidential campaign, Barack Obama promised on numerous occasions that his plan would “cut costs” and “lower your premiums” by $2,500 per year for the average family. Ironically, the foundation for Mr. Obama’s promises rests in a memo released by three consultants to the 2008 campaign—one of whom, David Blumenthal, now heads the Commonwealth Fund.
Since the law was enacted, Commonwealth and other supporters, while saying that Obamacare would mitigate premium increases, have largely failed to address the earlier promise that the law would reduce them outright. Another author of the 2008 memo, David Cutler, said in 2012 that, in retrospect, Mr. Obama made “occasional misstatements” when pledging that premiums would fall by $2,500 annually. In August 2012, PolitiFact rated that premiums pledge a “promise broken.”
Supporters of the law started out saying that Obamacare would reduce premiums in absolute terms. Now, backers say that the law will lower premium increases relative to what they would have been without the law—a tougher metric to quantify and a more difficult measure of success to sell politically. This is another example of how in Washington, where one stands on an issue frequently depends upon where one sits.
A look at the polls shows Democrats aren’t motivated by Obamacare, and they don’t think it is an important issue for the upcoming 2014 midterm elections, says Aaron Blake of the Washington Post.
Democrats who consider Obamacare to be one of the most important issues in the 2014 campaign are outnumbered three to one by Republicans who say the same, according to a new Washington Post-ABC poll.
Why are Democrats feeling so blasé about Obamacare? According to Blake:
A big reason there are so few people rallying around the law is that, even among those who support it, they don’t necessarily think it’s helping or is going to help.
While support for Obamacare has generally been in the low 40s, only about half of supporters think it will actually be a net-positive over the long haul and make things better in the U.S. health-care system.
And even fewer — 14 percent — say they currently see benefits accruing.