- - Sunday, February 9, 2014


At the heart of Obamacare is a corrupt bargain between big government and big insurance: The government gets to control the health care of 310 million Americans, while health insurance companies get tens of billions of dollars in annual income, all guaranteed thanks to the law’s individual mandate.

What if this “sweet” deal turns sour, though?

Let’s say that young people do the math and opt to pay the modest annual fine, rather than buy overpriced health insurance on the local exchange. The exchanges would fail, premiums would rise, and participating insurers would suffer financial losses.

Big insurance would have the option to either renege on the deal (which would be good) or demand a taxpayer bailout (which would be bad). What’s worse, that bailout could run into the tens of billions of dollars.

Does this “too big to fail” health care scenario sound too bad to be true? Guess what: It’s already baked in the deal.

That’s right, a bailout is automatic under a little-known provision of the “Affordable” Care Act, Section 1342, which provides for annual, unlimited “risk corridor” payments to participating insurers to ease the law’s effects on them — to and mask its true costs from voters.

These payments have no policy justification, except to put taxpayers on the hook for losses incurred by private corporations. Section 1342 is a built-in, blank-check bailout of the insurance companies. It encourages them to gamble with our money.

Insurance companies have a right to make an honest living. They do not have a right to shift their financial losses onto the American taxpayer. In a free market, companies rightly keep the rewards of their own good choices — and bear the costs of their own poor choices.

The Obamacare bailout is corporate welfare, something we should all oppose regardless of our private opinion on Obamacare. Opposing the bailout is common sense.

It transcends traditional “left versus right” politics. Happily, Sen. Marco Rubio of Florida and Rep. Tim Griffin of Arkansas, both Republicans, have introduced the Obamacare Taxpayer Bailout Prevention Act, a one-sentence bill to repeal Section 1342.

This reform is supported by a broad coalition of taxpayer advocates and health policy experts, including 33 national organizations, representing millions of Americans, who recently signed a FreedomWorks-led coalition letter in solidarity.

Big insurance has lost no time fighting the bill. The Blue Cross Blue Shield Association has swarmed Capitol Hill to block it. The group’s CEO, Scott Serota, recently wrote about being “increasingly concerned about momentum that is quickly building among some leading conservatives for elimination of the risk corridor and reinsurance programs.”

He should be worried. His industry’s position is indefensible.

Data from the newly launched Obamacare exchanges suggest that not enough young — and presumably healthy — people are signing up to offset the high costs of Obamacare coverage.

Instead, a disproportionate share of older — and presumably sicker — people are signing up. High premiums and out-of-pocket costs are deterring the healthy from getting on board. If this trend continues, insurers can expect significant financial losses.

While the precise amount of the impending bailout won’t be known until the exchanges have been operating for a year, we do know that it could be enormous — and that it will come on top of a staggering $1 trillion already slated under Obamacare to go to insurance companies over the coming decade.

Eliminating risk-corridor payments would avert an additional massive wealth transfer from taxpayers to private insurers. Even if the bailouts were justified, we couldn’t afford them — not on top of the existing $17 trillion national debt.

The problems the insurance industry is experiencing under the new law are the inevitable result of central planning. No government agency or team of highly skilled technocrats can know all the ins and outs of a health care system that accounts for one-sixth of the economy.

The only way to ensure patients get good quality care, when they need it, and at a price they can afford is to respect the right of patients and doctors to make their own health care decisions.

Those who can’t afford care can be helped by private charity and, in the last resort, local government. Federal involvement, in addition to being unconstitutional, is unnecessary.

Regardless of one’s views on Obamacare, common sense dictates that Congress should say “no” to bailing out private health insurers. Section 1342 should be repealed. It’s time to stop allowing corporations to privatize their winnings, while American families pay off their losses.

Dean Clancy is vice president of public policy at FreedomWorks.

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