Steve posted: "Obama Has screwed America yet again. I have been
wondering why the insurance companies have not been screaming bloody murder
over this debacle. It seemed to me that with all of these policy
cancellations they were somehow going to lose money. Ahh, " Respond to
this post by replying above this line
New post on *Fellowship of the Minds*
<http://fellowshipoftheminds.com/author/stungunsandmace/> “ObamaCare” You
Have To Pass It To Know What’s In
It.<http://fellowshipoftheminds.com/2014/01/14/obamacare-you-have-to-pass-it-to-know-whats-in-it/>
by
Steve <http://fellowshipoftheminds.com/author/stungunsandmace/>
Obama Has screwed America yet again. [image:
sangry_group_100-100]<http://fellowshipofminds.files.wordpress.com/2014/01/sangry_group_100-100.gif>
*I have been wondering why the insurance companies have not been screaming
bloody murder over this debacle. It seemed to me that with all of these
policy cancellations they were somehow going to lose money. Ahh, not so
fast. Read on and find out how we have been Screwed yet again. *
[image: 164wa4
(2)]<http://fellowshipofminds.files.wordpress.com/2014/01/164wa4-2.gif>
Obama has hidden in the law a Bailout , Yup Bailout for the insurance
companies. First, Section
1341<http://www.cms.gov/cciio/resources/files/downloads/3rs-final-rule.pdf>
, the “reinsurance”
fund<http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/06/labor-might-have-just-gotten-a-pass-on-an-obamacare-fee/>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<http://www.cms.gov/cciio/resources/files/downloads/3rs-final-rule.pdf>
, the “risk corridor”
provision<http://www.nationaljournal.com/magazine/how-the-authors-of-obamacare-protected-insurance-companies-20131110>
that
mandates a major taxpayer payout covering up to 80 percent of
insurance-company losses. -------------------------- ~Steve ~
---------------------------------------------------- Bailing Out Health
Insurers and Helping Obamacare
8:01 AM, JAN 13, 2014 • BY JEFFREY H.
ANDERSO<http://www.weeklystandard.com/author/jeffrey-h.-anderson>
Robert Laszewski—a prominent consultant to health insurance companies—recently
wrote<http://healthpolicyandmarket.blogspot.com/2014/01/will-there-be-obamacare-death-spiral-in.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+HealthCarePolicyAndMarketplaceBlog+%28Health+Care+Policy+and+Marketplace+Blog%29&m=1>
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<http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf>
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<http://2017project.org/2013/10/river-american-money-flows-d-c/#.UtHRRbTt2wU>,
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<http://2017project.org/2013/12/escape-obamacare/#.UtHR9rTt2wU>).
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.
Laszewski explains that if an insurance company expects its costs in a
given year to be X, and those costs end up being more than X plus 2
percent, taxpayers will come to that insurance company’s rescue—thanks to
Obamacare. In fact, once an insurance company covers that initial 2
percent in unexpected costs, taxpayers will cover at least 80 percent of
any additional costs the insurer accrues.
*Laszewski provides a couple of examples t*o help illustrate taxpayers’
unwitting generosity toward these “participating health plans” (plans sold
through Obamacare’s government-run exchanges):
*“[I]f the health plan has costs at 110% of the medical cost target [the
costs that the insurer expects to accrue], it will be responsible for only
102.4% of the target (a 2.4% shortfall)—only about a quarter of its
losses. *
*“If the health plan’s medical costs come in at 120% of the expected claim
cost target level, the health plan will only be responsible for 104.4% of
the target (a 4.4% shortfall)—again only about a quarter of its losses.”*
It’s actually only about a fifth in this example, as taxpayers would cover
78 percent of the losses, with the insurer covering just 22 percent.
Importantly, Laszewski (who’s in a position to know) says that “my sense is
that health plans, because they are so insulated from big losses, will
generally stand *pat with their 2014 rate structures for 2015—no matter how
bad the* early claims experience looks. I expect that the health insurance
industry will be content to give the Obamacare in the fall of 2014, when
the 2015 open enrollment takes place.”
In other words, because taxpayers will bail them out (through both the
“Reinsurance Program” and the “Risk Corridor Program”), *insurers won’t
raise* *their premiums as much for 2015 as they otherwise would in response
to* *the sicker, older risk pools that Obamacare is clearly
attracting. *This in turn will make Obamacare look better going
forward than it should
and will give its government-run exchanges another good swing at the “young
invincibles,” who so far don’t seem too enamored with the product that
Obama and his insurance cronies are hawking.
All of this puts two things in sharp relief: First, Republicans should
attach a no-bailout provision to any debt-ceiling increase—
as Charles Krauthammer has
suggested<http://2017project.org/2014/01/stop-bailout-now/#.UtHPw7Tt2wU>—
*Story Here!
<http://www.washingtonpost.com/opinions/charles-krauthammer-stop-the-bailout-now/2014/01/02/6b3087a2-73d7-11e3-8def-a33011492df2_story.html>*
along with a provision delaying Obamacare’s liberty-sapping individual
mandate (the delay of which would further undermine Obamacare’s
exchanges). *Second,* *Obamacare needs to be comprehensively repealed in
January 2017,* *not modified or “fixed”*—and Republicans need to advance a
winning alternative to pave the way to that crucial result.
*UPDATE*: Senator Marco Rubio introduced a bill in
November<http://online.wsj.com/news/articles/SB10001424052702303985504579205743008770218>
to
stop the part of the bailout that would take place through the Risk
Corridor Program.
http://www.weeklystandard.com/blogs/bailing-out-health-insurers-and-helping-obamacare_774167.html?page=1
*Steve <http://fellowshipoftheminds.com/author/stungunsandmace/>* |
January 14, 2014 at 3:13 am | Categories: 2014
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