The Next Obamacare Scandal: A Taxpayer-Funded Bailout Of Insurers

Zero Hedge
May 21, 2014

The teleprompter is still hot from all the Obama spit unleashed in his latest sincerely passionate denial that his administration knew anything, anything at all, about what is merely the latest scandal to rock the president, this time surrounding the Veterans Affairs fiasco, and already a brand new scandal is taking shape, this one Obama however will not be able to sweep as easily under the rug. The LA Times reports that the “Obama administration has quietly adjusted key provisions of its signature healthcare law to potentially make billions of additional taxpayer dollars available to the insurance industry if companies providing coverage through the Affordable Care Act lose money.” In other words, yet another taxpayer funded bailout.

More on this stunner from LA Times:

The move was buried in hundreds of pages of new regulations issued late last week. It comes as part of an intensive administration effort to hold down premium increases for next year, a top priority for the White House as the rates will be announced ahead of this fall’s congressional elections.

Administration officials for months have denied charges by opponents that they plan a “bailout” for insurance companies providing coverage under the healthcare law.

They continue to argue that most insurers shouldn’t need to substantially increase premiums because safeguards in the healthcare law will protect them over the next several years.

But the change in regulations essentially provides insurers with another backup: If they keep rate increases modest over the next couple of years but lose money, the administration will tap federal funds as needed to cover shortfalls.

Although little noticed so far, the plan was already beginning to fuel a new round of attacks Tuesday from the healthcare law’s critics.

Perhaps the reason why it took so long for the “critics” to get to the fine print is because there are already burried and preoccupied digesting all the other scandals rocking Obama which, under any other administration, would have resulted in the objective media screaming for mass terminations, if not the scalp of the president himself.

Yet somehow, with a daily orchestrated wink and a smile, so far Obama has been able to writhe his way out unscathed from virtually everything.

We doubt this time will be any different, especially if and when the latest round of executive orders come flying:

Although more than 8 million people signed up for health coverage under the law, exceeding expectations, insurance companies in several states have been eyeing significant rate increases for next year amid concerns that their new customers are older and sicker than anticipated.

Insurers around the country have started to file proposed 2015 premiums, just as the midterm campaigns are heating up. Obamacare, as the law is often called, remains a top campaign issue, and big premium increases in states with tightly contested races could prove politically disastrous for Democrats.

If rates go up dramatically, consumers may also turn away from insurance marketplaces in some states, leading to their collapse.

Proposed increases in a few states where insurers have already filed 2015 rates have been relatively low, with several major carriers seeking just single-digit hikes. But insurers in closely watched states, such as Florida, Pennsylvania, North Carolina and Arkansas, are still preparing their filings.

“It’s absolutely paramount to keep premiums in check,” said Len Nichols, a health economist at George Mason University who has advised officials working on the law.

How could this possibly happen: simple – socialized central-planning is always, without fail a precursor to failure:

To stabilize this new system, the law set up a complex system of funds, including one known as the Temporary Risk Corridors Program, that collect money from insurers and transfer it from companies with healthier, less expensive consumers to those with sicker, more costly consumers.

This system was supposed to pay for itself, as does a similar one used to shift money between drug plans in the Medicare Part D program.

But insurance industry officials have grown increasingly anxious about the new system’s adequacy.

So who will foot the bill for insurers’ shortfalls?

Pressure is most acute on insurers in states where healthy consumers were allowed to remain in old plans that are not sold on the new online marketplaces, an option Obama offered to states amid a political firestorm over plan cancellations last year. The president had promised people would be able to stick with their plans.

The renewal temporarily solved a political problem for the White House, but created a new one. Maintaining these old plans kept many healthy consumers out of the marketplaces, making the pool of new customers less healthy and therefore potentially more expensive for insurers, according to experts.

In a series of White House meetings over the last several months, Obama and other senior administration officials have sought to persuade insurance company CEOs to nonetheless hold rates in check, arguing that the marketplaces would stabilize over time. But with proposed 2015 rates beginning to come in, the administration acceded to industry demands for a clear guarantee that more money would be available to cover potential losses.

“In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the secretary to make full payments to issuers,” the regulation published Friday notes. “In that event, HHS will use other sources of funding for the risk corridor payments, subject to the availability of appropriations.”

That language allows the administration to tap funds appropriated for other health programs to supplement payments to insurers, according to administration and industry officials.

Among congressional Republicans, the decision has raised concerns. “If the program costs more than it brings in, the secretary would be able to divert money intended for other programs,” Republicans on the Senate Budget Committee warned.

In other words, “you” dear US taxpayer. And because once you start the bailouts you don’t stop, and since this is merely the first manifestation of what happens to the economy when the true impact of the past 6 years of Obama’s “executive order”-based rule emerge, prepare for many more bailouts.

The good news of course is that it will be up to you again, dear taxpayers, to pay for the physician bills of the drivers of “rolling sarcophagi” made by that other bailed out corporation, GM, whose record 30 recalls so far this year would never have become public knowledge had it not been exposed that its menegement, which was part of both the new and old GM, been actively covering up the shoddy quality of its products and the deaths of its customers, just so the company that only exists thanks to the sunk costs of even more taxpayers wouldn’t incur a few extra repair costs.

And what can be nobler than paying for the healthcare of your fellow human being?

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