Obama Administration Promises to Shift Money Around to Make Obamacare's Health Insurer Bailouts Work, If Need Be



Obamacare's defenders have responded to charges that the law creates a system of bailouts for health insurers by arguing that the bailouts may not actually be bailouts. After all, the law's risk corridors create a system of symmetrical payments in which insurers that spend somewhat more than expected on health claims get paid by the administration, but those spending somewhat less than expected must pay in. In theory, it all balances out, with some insurers paying in and others getting paid. And it's even possible that, overall, insurers will pay in more than they are paid.

Possible, yes, but far from certain. What happens if most or all of the insurers participating in Obamacare's exchanges end up with higher than expected claims, and the administration owes them all? 

Well, in that case they'll find the money to pay. Somehow. As Philip Klein reports in The Washington Examiner

Bowing to an aggressive lobbying effort by insurers, the Obama administration announced Friday it would use "other sources of funding," if needed, to finance a bailout for insurance companies if the industry racks up excessive losses through President Obama's health care law.

The news, buried in a 435-page regulatory filing by the Centers for Medicare and Medicaid Services, undermines prior assurances by the administration that the program would be budget-neutral.

There's a bit of a catch, which is that the regulation says it will use those other funding sources "subject to the availability of appropriations." And according to a recent Congressional Research Service memo, the law doesn't actually appropriate any funds for the risk corridors program. And it's a pretty safe bet that Republicans in Congress aren't going to appropriate funds any time soon (not that the administration has felt particularly constrained by the finer details of the law in the past). This could get complicated. 

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  1. I’ve got a plan for shifting some money around. Give it back to the tax payers and go get a real fucking job, you parasites.

    1. They have the most important job of all: lording it over the peasants and telling them what to do.

  2. From each according to his ability; to each according to his need. Works every time.

    1. From each according to his ability what’s fair; to each according to his what the government thinks is his need.


  3. The appropriations issue is only a problem if you think there is such a thing as a rule of law anymore. What will happen if Obama just spends the money and tells Congress to go fuck itself? I am sure Eric Holder will get right on prosecuting that anti-deficiency act violation. You could sue but the Courts have consistently shown an unwillingness to stop this administration’s or really any administration’s lawlessness. Who has standing to sue for illegal spending? And even if they do, the Courts will just call it a political issue and refuse to rule.

    At this point, the only reason Obama even follows the budget is because he is too dimwitted to realize he doesn’t have to. They were already willing to borrow money if the debt ceiling wasn’t raised. I really don’t see how they won’t just write a check to bailout the insurance companies. It is not like there is anything anyone can do to stop them. How many divisions does the House have? And it is not like there will be any electoral consequences in 2016, since the story will be portrayed as an obscure partisan fist fight that is detailed on page 12 of the federal page of the WAPO and nowhere else.

    1. I’m going to ring the shreeky bell and state again that I never believed that anyone who followed “Bush the Lesser” had a chance in hell of making him look like a competent and thoughtful chief executive.

      Barry Obama has shown me just how wrong this notion was.

    2. Sure. All they have to do is issue a $5 trillion platinum coin.

      Voila. No more House.

    3. Someone woke up in a bright mood this morning. You sound like you need a drink or three.

      1. I am serious. What is to stop him from doing it?

        1. A little thing I like to call good ol’ American common sense, John. If every president acted like you suggest, we’d have a stratospheric mountain of debt.

          1. Good point. It is not like we don’t have 14 or so trillions of debt. And Obama has been so committed to the rule of law these last few years.

  4. Obamacare’s rollout has been like seeing the same car in an accident every day on your way to work.

    And then realizing the car is registered in your name.

    1. How do you work into your analogy the crowd of partisans insisting that each wreck is a sign of good things to come?

      1. Used car salesmen.

  5. when you are borrowing nearly half of every dollar you spend, just what “other sources of funding” are there? Yes, FTWY.

    1. or FYTW.

    2. As long as you have checks in the checkbook…

    3. Freedom of the press?

    4. “We owe it to ourselves.”

  6. Deficit reduction!

  7. symmetrical payments

    Not with asymmetric incentives.

  8. Look, the administration is only attempting to address concerns about death spirals in the health insurance market. Why would we oppose that?

    They’re merely going to wed the fates of successful companies to failing ones, eliminate much of the incentive to compete or innovate, and promise to sign blank checks made out to insurers, paid for by American taxpayers, forever. Really, why are we complaining?

    1. Worth reading if only for the leading graphic, but the costs to each state for expanding Medicaid just made my day. California and New York, bluest of the blue states, falling under the yoke. It’s beautiful.

  9. I wouldn’t call it a bailout either, but that’s beside the point. The twin pillars of the ACA are the Guaranteed Issue and Community Rating clause — you have to sell insurance to anyone who wants it, at a price that doesn’t take their health into account. The more obvious consequences of this absurd scheme include companies who will game the system by providing cheap, minimal coverage (see: narrow networks), and those who will disproportionately attract the sicker population due to their higher quality care (adverse selection).

    The “three Rs” of risk adjustment, reinsurance, and the temporary risk-corridor program (aka bailouts) are a few of the many provisions to deal with these consequences. Frankly, once you accept the main framework of the ACA, they are fairly reasonable ways of dealing with those issues.

    Just like with the mandates, it doesn’t make a ton of sense to attack these provisions out of context of the larger legislated clusterfuck they are seeking to mitigate.

  10. If the net cost to the taxpayer is no more than 3-5B, Obama can use his executive authority to find the money somewhere, say the VA hospital budget. If he is challenged by a lawsuit, the Supreme Court will not decide the matter until he is out of office.
    A President cannot change the parameters of tax law. But he has some discretion over spending, and is silently hoping that this discretion will see him through.

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