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House GOP: Obamacare ‘bailout’ favors large insurers over taxpayers

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Most health insurance companies are expecting a government "bailout" to compensate them for costs associated with signing up to provide coverage through Obamacare, said House Republicans who surveyed the insurers.

The GOP lawmakers said Wednesday that this means the administration will put those health companies' needs over those of taxpayers, who will end up funding the payments designed to cover excessive losses that insurers sustain for providing Obamacare-compliant health plans.

"In addition to providing health insurance companies with a mandate for individuals to purchase their product as well as providing expensive subsidies for people who purchase coverage in an Obamacare exchange, the law provided large backdoor bailouts of health insurance companies," said Rep. Jim Jordan, Ohio Republican. "The American people have a right to know how much these backdoor bailouts will cost."

Mr. Jordan, chairman of the House Oversight subcommittee on economic growth, job opportunity and regulatory affairs, said nearly all the insurers contacted by his panel expect a payout, and that any expenditure without an appropriation from Congress would be an illegal transfer of funds.

The GOP is hoping to rally populist anger by portraying the program as a "bailout" — a politically loaded term after the government rescued banks and auto manufacturers during the 2008-2009 financial collapse.

While the Obama administration says a deficit under the program is highly unlikely, it lined up a funding source in case they must pay out to insurers, causing alarm among GOP lawmakers who say the Obama White House has a penchant for ignoring Congress' will.

"We believe that the program will ultimately be budget-neutral," Mandy Cohen, a deputy administrator for the Centers for Medicare and Medicaid Services (CMS), told Mr. Jordan's panel.

She said the administration expects to pay for the program, as needed, through user fees from the qualified health plans that stand to benefit from the program. The administration argues it already has the legal authority to collect the fees.

The government also collects money from companies with costs that are less than expected, meaning the feds could get a windfall.

The health care law authorized risk corridors for 2014 through 2016. Insurers must remit charges to the Department of Health and Human Services when allowable costs are at least 3 percent less than the plan's targeted amount, but they will receive payments when their costs exceed their targets by at least 3 percent.

Subcommittee Democrats said without the risk corridor programs, insurers may be unable to cover people with preexisting conditions — a key selling point of Obamacare.

They also wondered why risk-corridor programs were acceptable for Medicare Part D — the prescription drug program pushed by former President George W. Bush — but not for Obamacare.

"They were adopted by a Republican Congress," said Rep. Elijah E. Cummings, Maryland Democrat. "They have been extremely successful in the Part D program, and they will be successful for the Affordable Care Act."

Mr. Sessions said there was an important difference in Mr. Bush's plan.
"That law, Part D," he said, "included mandatory appropriations for just that purpose."

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