Just when it seemed we’ve heard every possible far-right complaint about the Affordable Care Act, Republicans uncover a new area of concern. Sen. Marco Rubio (R-Fla.) has taken the lead in pushing his party’s new talking point, including writing an op-ed for Fox News on the subject this week.
Health and Human Services Secretary Kathleen Sebelius is in Tampa today, Monday, January 13, for an ObamaCare outreach event, and she owes Floridians an answer. Why should taxpayers have to bail out health insurance companies in the increasingly likely event that ObamaCare leaves them with financial losses?
The answer should be simple. Whatever larger differences we have about ObamaCare, we should completely eliminate any chance of a taxpayer-funded bailout for health insurers.
Rubio’s piece for Fox News went on to say that the “authority for this bailout was buried deep inside ObamaCare.” That’s an amusing way of saying, “The relevant provision has been sitting there in the law for nearly four years, but since I never bothered to do real policy analysis while whining, I’m just learning about this now.”
It’s not just Rubio, by the way. Dick Morris devoted his latest column to attacking the “bailout” for the insurance industry, too. Charles Krauthammer devoted a column to this two weeks ago, saying Republicans should crash the economy on purpose unless Democrats agree to “stop the bailout” of private health insurers.
What in the world are these people talking about? I’m glad you asked.
Jon Chait recently noted:
In recent weeks, it has begun to dawn on some conservatives that the actuarial death spiral they confidently predicted for years – in which the young and healthy shun the exchanges, leading to sicker and costlier patients and rising prices, in turn driving out the remaining healthy customers – may not actually transpire. It won’t for several reasons, one of them being a set of protections embedded in the law itself called “risk corridors and reinsurance,” which compensate insurance companies that wind up with a sicker customer base in the first three years of the law’s operation, thus preventing a death spiral.
Right. The risk of a so-called “death spiral” is pretty much over anyway, but architects of the Affordable Care Act saw this as a possibility. To prepare for the contingency, officials established some temporary measures to bolster the system in case insurers were stuck with a disproportionate older, sick consumer base.
Sy Mukherjee explained the broader policy picture very well:
They’re not “bailouts” at all. In fact, they’re mostly temporary measures and consumer protections that were crafted as important backstops for the health law’s potentially rickety first three years, and they already exist for other government programs (including the Republican-proposed Medicare Part D prescription drug benefit). And if Rubio succeeds in repealing them, insurance companies won’t be the only ones that suffer – potentially millions of Americans could see their monthly insurance premiums skyrocket.
Insurance companies were sort of shooting in the dark when they set premiums for Obamacare’s first year. They had to approximate how many people would enroll, how old the customers would be, how sick they would be, how much insurers would have to pay out in claims – but the whole enterprise was, ultimately, a series of educated guesses. […]
Enter reinsurance, risk-adjustment, and risk corridors – a trio of financial shock absorbers sometimes referred to collectively as “The Three Rs.” Two out of the three Rs – reinsurance and risk corridors – are temporary programs, while risk-adjustment is a permanent Obamacare provision that will stabilize insurance pools from year-to-year.
The shock absorbers are set to phase out over the next few years, as uncertainties fade away.
So why would Republican lawmakers and Republican pundits be so eager to destroy these provisions? Because without them, Republicans hope to put the U.S. health care system at risk, jeopardizing insurers and subjecting consumers to vastly higher premiums.
Wouldn’t that do considerable harm? Of course it would – that’s the point. Many GOP policymakers still hope to crash the system, on purpose, so they can then say, “See? Obamacare doesn’t work.”
There’s no chance Democrats would invite such chaos, but the notion of a “bailout” is nevertheless poised to become a popular issue on Fox News and in Republican fundraising appeals. Expect an all-caps email from your wacky uncle any minute now.