And that, friends, is the way Congress can lay this monstrosity to rest.
First order of business for the returning Congress: The No Bailout for Insurance Companies Act of 2014.
Make it one line long: “Sections 1341 and 1342 of the Affordable Care Act are hereby repealed.”
End of bill. End of bailout. End of story.
Why do we need it? On Dec. 18, the chairman of the Council of Economic Advisers was asked what was the administration’s Plan B if, because of adverse selection (enrolling too few young and healthies), America’s insurance companies face financial difficulty.
Jason Furman wouldn’t bite. “There’s a Plan A,” he replied. Enroll the young.
But of course there’s a Plan B. It’s a government bailout.
Administration officials can’t say it for political reasons. And they don’t have to say it because it’s already in the Affordable Care Act, buried deep.
First, Section 1341, the “reinsurance” fund collected from insurers and self-insuring employers at a nifty $63 a head. (Who do you think the cost is passed on to?) This yields about $20 billion over three years to cover losses.
Then there is Section 1342, the “risk corridor” provision that mandates a major taxpayer payout covering up to 80 percent of insurance-company losses.
Never heard of these? That’s the beauty of passing a bill of such monstrous length. You can insert a chicken soup recipe and no one will notice.
The whole scheme was risky enough to begin with — getting enough enrollees and making sure 40 percent are young and healthy. Obamacare is already far behind its own enrollment estimates. But things have gotten worse. The administration has been changing the rules repeatedly — with every scrimmage-line audible raising costs and diminishing revenue.
First, it postponed the employer mandate. Then, it exempted from the individual mandate people whose policies were canceled (by Obamacare). And for those who did join the exchanges, Health and Human Services Secretary Kathleen Sebelius is “strongly encouraging” insurers to — during the “transition” — cover doctors and drugs not included in their clients’ plans.
The insurers were stunned. Told to give free coverage. Deprived of their best customers. Forced to offer stripped-down “catastrophic” plans to over-30 clients (contrary to the law). These dictates, complained their spokesman, could “destabilize” the insurance market.
Translation: How are we going to survive this? Shrinking revenues and rising costs could bring on the “death spiral” — an unbalanced patient pool forcing huge premium increases (to restore revenue) that would further unbalance the patient pool as the young and healthy drop out.
End result? Insolvency — before which the insurance companies will pull out of Obamacare.
Solution? A huge government bailout. It’s Obamacare’s escape hatch. And — surprise, surprise — it’s already baked into the law.
Which is why the GOP needs to act. Obamacare is a Rube Goldberg machine with hundreds of moving parts. Without viable insurance companies doing the work, it falls apart. No bailout, no Obamacare.
Such a bill would be overwhelmingly popular because Americans hate fat-cat bailouts of any kind. Why should their tax dollars be spent not only saving giant insurers but also rescuing this unworkable, unbalanced, unstable, unpopular money-pit of a health care scheme?
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.