End bailout for insurance companies
WASHINGTON — 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Make it one line long: “Sections 1341 and 1342 of the Affordable Care Act are hereby repealed.”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), the 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.
Nancy Pelosi was right: We’d have to pass the damn thing to know what’s in it. Well, now we have and now we know.
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 GOP House should pass it and send it to Harry Reid’s Democratic Senate. Democrats know it could be fatal for Obamacare. The only alternative would be single-payer. And try selling that to the country after the spectacularly incompetent launch of — and subsequent widespread disaffection with — mere semi-nationalization.
Do you really think vulnerable Democrats up for re-election will vote for a bailout? And who better to slay Obamacare than a Democratic Senate — liberalism repudiating its most important creation of the last 50 years.
Want to be even bolder? Attach the anti-bailout bill to the debt ceiling. That and nothing else. Dare the president to stand up and say: “I’m willing to let the country default in order to preserve a massive bailout for insurance companies.”
In the past, Republicans made unrealistic and unpopular debt-ceiling demands — and lost badly. They learned their lesson. Last year, Republicans presented one simple unassailable debt-ceiling demand — that the Senate pass its first budget in four years.
Who could argue with that? The Senate capitulated within two days.
Who can argue with no bailout? Let the Senate Democrats decide — support the bailout and lose the Senate. Or oppose the bailout and bury Obamacare.
Happy New Year.
Charles Krauthammer is a columnist for The Washington Post. Reach him via e-mail at email@example.com. © 2013 The Washington Post Writers Group.