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.
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.
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.