Bailout? Obamacare already limits insurance company losses

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bailout-money-540x286Conservatives have warned since 2009 that Obamacare coverage-mandates would eventually bankrupt the private health  insurance industry leading inevitably to a call for a single-payer government-run socialized medical system in the United States. Of late, Charles Krauthammer has warned of a coming demand for bailout of insurance companies.

But it turns out that provisions of Obamacare, that former Speaker Nancy Pelosi said we could only discover after we quickly passed ACA, already limit the losses of insurance companies with payments to them from taxpayer funds. Just as in the War on Poverty, when liberal Democrat policies fail, the antidote is more big government spending:

Robert Laszewski—a prominent consultant to health insurance companies—recently wrote in a remarkably candid blog post that, while Obamacare is almost certain to cause insurance costs to skyrocket even higher than it already has, “insurers won’t be losing a lot of sleep over it.”  How can this be?  Because insurance companies won’t bear the cost of their own losses—at least not more than about a quarter of them.  The other three-quarters will be borne by American taxpayers.

For some reason, President Obama hasn’t talked about this particular feature of his signature legislation.  Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers,through Washington, to health insurance companies.  It’s even worse that Obamacare is trying to coerce Americans into buying those same insurers’ product (although there are escape routes).  It’s almost unbelievable that it will also subsidize those same insurers’ losses.

But that’s exactly what it will do—unless Republicans take action.  As Laszewski explains, Obamacare contains a “Reinsurance Program that caps big claim costs for insurers (individual plans only).”  He writes that “in 2014, 80% of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example.”

In other words, insurance purchased through Obamacare’s government-run exchanges isn’t even full-fledged private insurance; rather, it’s a sort of private-public hybrid.  Private insurance companies pay for costs below $45,000, then taxpayers generously pick up the tab—a tab that their president hasn’t ever bothered to tell them he has opened up on their behalf—for four-fifths of the next $200,000-plus worth of costs.  In this way, and so many others, Obamacare takes a major step toward the government monopoly over American medicine (“single payer”) that liberals drool about in their sleep.

Laszewski adds, “The reinsurance program has done and will continue to do what it was intended to do; help attract and keep more carriers in Obamacare than might have otherwise come.”  Thus, Obamacare is being aided by having taxpayers subsidize big insurance companies’ business expenses.  (Who could ever have guessed that big government and big business might be natural allies?) But, amazingly, it doesn’t stop there.  Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.”  So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses.

Still think Obamacare will “fall of its own weight?” Think again. The ACA explicitely empowers the “Secretary of HHS to decide” most legal matters. The Supreme Court already pretended the individual mandate fine was a constitutional “tax”. The U.S. Senate exists as an arm of the Democratic Party content to have the Chief executive to make “law’ on the fly.

And now we discover that Obamacare already contains a too-big-to-fail bailout of Obama’s co-conspirators in the destruction of a free market in health insurance.

The only way America be saved from Obamacare-driven poverty is with the weight of Republican election victories promising to repeal Obamacare. Obamacare will fall of its on weight all right. But it will survive every fall by landing on your wallet.

Byron York warned of this late last year:

“One man with courage makes a majority.” – Andrew Jackson

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