Obamacare's Taxpayer Bailout of Health Insurers
As health insurance companies scramble to find a way to remain profitable under the Affordable Care Act, both insurers and the Obama administration are collectively shifting the cost burden of this unraveling health care law to the people it was designed to help.
April’s announcement by United HealthCare – the nation’s largest private health insurance provider – that the company would immediately begin its exit from most of Obamacare’s state-level insurance exchanges, signaled an escalation of the government-run healthcare system’s long, downward trend. To make matters worse, Humana Inc, which is expected to be bought by larger Aetna Inc, is considering a similar move and also has plans to increase premium prices.
To any objective observer, it is now clear that Obamacare will succumb to its intrinsic flaws far sooner than even the most critical of economists had predicted.
But to President Barack Obama, a legacy-steering accomplishment like Obamacare (the only piece of legislation that bears his name), is just too big to fail.
Recent reports reveal that the Department of Health and Human Services has misused more than $3.5 billion of taxpayer money to offset the mounting losses incurred by insurance companies since Obamacare’s passage.
Several lawmakers have already sounded the alarm over payments made to health care companies via Obamacare’s so-called “reinsurance program.” Health and Human Services was legally required to deposit revenues collected from the Obamacare exchanges with the Treasury Department, with $5 billion earmarked for deficit reduction and all overages to be re-distributed to insurers based on a provider’s given share of the sickest and least-affluent patients. Instead, HHS funneled payments directly to the insurance companies of their choosing, blatantly using tax money to buy support, cooperation and continued participation in the shaky state-sponsored exchanges.
This type of corporate welfare is the root cause of Americans’ deep dissatisfaction with Washington, where hardworking taxpayers are asked to pay for the failures of the political class. Meanwhile, more and more families will find it harder to keep pace with runaway premiums as the insurer lifelines are scheduled to end after 2016, and an alarming number of patients will suffer the very real consequences of skyrocketing costs and rapidly diminishing quality of care.
To stop this harmful and potentially illegal bailout, Republican Sen. Ben Sasse of Nebraska has introduced legislation to hold HHS accountable, ensure that the law is applied as written, and to prevent taxpayers from paying for yet another bailout of big business.
As Sasse said, “Taxpayers should not get one penny less than what the law says they are supposed to get.”
This latest bailout strategy is further evidence that Obamacare is not only a burden to patients and taxpayers but also highly unworkable for doctors and insurers.
A study released by the Mercatus Center measured the impact of the bailouts made under the guise of the reinsurance program and sheds new light on the worsening instability of our post-Obama health care system. With the reinsurance program set to expire this year, insurance premiums alone must soon cover insurers expenses and losses. As this study revealed, insurance companies will need to dramatically raise premiums and reduce services just to break even, ultimately making more profitable “Cadillac plans” less attainable or less attractive to those healthy enrollees whose participation is needed to make the whole scheme work.
Obamacare has increased costs, decreased quality, and had a dubious impact on patients’ long-term access to care. What so many feared has now been confirmed — a system of this type cannot succeed or even stand on its own.
Unfortunately, as was the case with the big banks and well-connected businesses already bailed out by the Obama administration, the average citizen will be left footing the bill.