Posted by Curt on 26 November, 2015 at 2:28 pm. 4 comments already!


Washington Examiner:

Until recently, the insurance giants saw Obamacare as a cash cow. They are now finding the law’s insurance marketplaces to be sickly quagmires causing billions in losses.

In response, the Obamacare insiders — the wealthy and powerful operatives who alternate between top government jobs and top industry jobs — are hustling to find more bailout money for insurers. Republicans, if they are able to hold their ground in the face of lobbyist pressure, can block the bailout of Obamacare and its corporate clientele.

United Healthcare, the nation’s largest insurer, last week announced it was suffering huge losses in the exchanges. “We cannot sustain these losses” UHC’s CEO said in a conference call, saying conditions for the insurer were “worsening.” The company forecast $700 million in losses on the exchanges. Fellow insurance giant Aetna also said it expected to lose money on the exchanges, and other insurers said enrollment was lower than they expected.

Hours after UHC’s dire announcement, the Obama administration issued an interesting statement of its own — that it would find a way to get insurers the bailout money congressional Republicans had voted to deny them.

Here’s the background: Obamacare included a few provisions intended to smooth over bumps in implementation. One was called “risk corridors” — a three-year safety net for insurers who do much worse than expected, paid for by an extra tax on insurers who do much better.

The Centers for Medicare & Medicaid Services (CMS) had announced in October that insurers losses for 2014 entitled them to $2.87 billion in bailout payments through “risk corridors.” The problem is that super-profitable insurers did not pay nearly that much into the bailout fund.

In late 2014, Sen. Marco Rubio, R-Fla., inserted into the so-called Cromnibus spending bill a provision that prohibited CMS from paying out more in risk corridor payments than it takes in. Profitable insurers — not taxpayers — must subsidize their less profitable peers.

Since insurers’ excess losses in 2014 outweighed their excess profits by an 8-to-1 margin, each money-losing insurer will get only one eighth of the bailout money it would otherwise recoup.

CMS announced last week that the government was going to find a way to pay the insurers their full bailout, anyway. “The remaining 2014 risk corridors payments will be made from 2015 risk corridors collections, and if necessary, 2016 collections.”

What if excess losses in those years again surpass excess profits? CMS said it “will explore other sources of funding for risk corridors payments….” CMS also declared the unfunded portion of Obamacare’s initial promised insurer bailout was nevertheless an “obligation of the United States Government for which full payment is required,” even though at least under the current appropriation law it is illegal.

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