Skip to comments.Don't Let Insurers Shift Risk to Taxpayers
Posted on 01/25/2014 8:03:07 AM PST by Kaslin
The big health insurance companies played a high-stakes double game throughout the 2009 health care fight, funding attacks on the so-called public option an explicitly government-run competitor while otherwise supporting the central elements of the bill that ultimately passed: vast taxpayer-funded subsidies flowing to their potential customers and a mandate requiring every American to buy their products. Yet the law is becoming such a disaster that the insurers stand to take losses in the new exchanges losses that will largely be passed on to taxpayers under a provision called Risk Corridors.
Risk Corridors are a de facto bailout built into the structure of the law. As written and originally explained the provision would have smoothed out pricing risk by taking funds from insurers who made excess profits and transferring them to insurers who take losses. This was supposed to prevent companies from marketing specifically to healthier segments of the population and instead give them an incentive to simply enroll as many people as possible.
But with the exchanges overall failing to attract enough healthy people, nearly every insurer is now expected to be in a loss position on their exchange plans, making the Risk Corridors a transfer not between companies but instead a direct pipeline of tax dollars from the U.S. Treasury to the coffers of insurers. As if the laws massive subsidized and mandated demand werent enough.
Moodys recently downgraded the insurance companies to a negative outlook, citing the ongoing unstable and evolving environment and new regulations and announcements that impose operational changes well after product and pricing decisions. For all the vast subsidies and the mandate, they predicted just one percent more Americans to be on the rolls of the insurance companies in 2014 which is down from three percent growth in 2013.
One source of uncertainty might be efforts well underway by Rep. Tim Griffin of Arkansas and Sen. Marco Rubio of Florida to repeal the Risk Corridors program.
Griffin and Rubio correctly reason that its wrong to force taxpayers to foot the bill for an open-ended bailout on top of the vast subsidies already flowing under the law. If insurance companies cant make money selling exchange plans even with the mandate and subsidies, then they shouldnt choose to participate.
Lobbyists for the Blue Cross Blue Shield Association are in freak out mode at potentially losing one of their many sources of tax dollars under the law. They are warning Congress that taking away their Risk Corridors payments will result in massive premium increases and could cause private insurers to become insolvent and will ultimately lead to a single-payer system.
But Aetna CEO Mark Bertolini told CNBC he was indifferent to participating in the Obamacare exchanges because they are a tiny part of Aetnas business. About three percent of its revenue. And on the Griffin-Rubio bill he said: Whether or not there's a government bailout because we lose some money on members is irrelevant to us from our standpoint of our earnings. So much for that single-payer scenario.
Ending Risk Corridors (or alternatively limiting their outlays to program revenues to make them function as originally understood) is not a silver bullet to take down Obamacare, as some on the right might dream. Its not going to put any insurance companies out of business, notwithstanding the hyperbole from the Blues. But it will save taxpayers billions of dollars and it will force insurance companies to suffer just a little bit more of the consequences of their collaboration with the administration and wonder if its time to break ranks and support real reforms. And a bailout-weary American public would surely be appreciative.
I used to worry about these businesses, but they climbed in bed with those that want their destruction. The Pubs have made it clear that they don't have the will to end obamacare and as a result we will end up with the govt running healthcare.
Moving forward, I think the question is what do people do in countries that have govt run healthcare. In Canada, they leave and come here for immediate care. What do they do in England? Are there independent hospitals, clinics and doctors? If so how do people pay?
This was trhe plan all along.
Then they nationalize them, and take over just like Obama did to GM.
Remember when Venezuela’s dictator Hugo Chavez even said Obnama was moving left even faster than him?
He was excited as all hell, until he found out he was dying of cancer and then spent the next two years smooching any crucifix in sight.
Its sad to realize that this Obamacare was a bailout deal between the health insurance industry and politicians that may be unraveling.
We can say ‘no more bailouts’ but there could be one coming here. The pharma industry got taxpayer dollars to pay for their products with Medicare Part D because of the leadership of a Republican President-George W. Bush.
And there’s been a succession of business and labor union bailouts from R’s and D’s ever since.
They made their bed...
Taxpayers always pay. Sometimes instead of being called taxpayers they’re called consumers, customers, investors or owners, but taxpayers always pay.
When those affected by the healthcare disaster are viewed, one can see that there is going to be pain and suffering on many levels.
The unaffected are mostly the bureaucrats and isolated groups of the people. The great masses of those currently on employer provided insurance will begin to really feel the pain this summer as costs rise precipitously.
I would argue the insurance companies are for the short term in a lose lose position. regardless of what they do, outside forces are going to cause pain.
The concept of Taxpayer bailout is not without merit. To punish the insurance companies for action beyond their ability to actually change is foolish.
When Obamacare is finally destroyed, there must be someone to clean up the mess and restore order. That will require input and work from several sources but will be based on knowledgeable and strong insurance companies.
The insurance industry hand in hand with the healthcare providers will lead us to the new age of medicine in America.
The discussion of punishment should not be directed toward the insurors. The punishment must be imposed on the leftwing wackos that designed and implemented the disaster. Don’t beat up on Blue cross or Humana...... beat, literally, Obama and Pelosi and Reed and thousands of others.
I would very much enjoy seeing the insurance co. who crawled into bed with his holiness get what they deserve. Only problem is the rest of us get screwed again!!
Quite the dilemma.
I knew we were in trouble when we bailed out the Savings And Loans.
“How much interest do you pay?”
“Here at Johnny Friendly’s Savings And Loans, we promise 76% interest.”
“Everybody else is paying 5%.”
“Yeah, but we got a proven business model.”
“We get old folks to get on TV and cry so everyone forgets they were greedy and stupid and then the politicians start shoveling cash to us.”
Uh, that would include insurers. Then what?
Fascism is such a joy.
Big Govt. (Collectivism) IS coerced Risk Shifting!
That’s what it IS, in brief!
theft of individual property.
Google "Harley Street".