The Health Insurance Bailout


We have mentioned here on this site that we fear the departure of insurers from the exchange will result in a bailout to keep them on board.  Well, it seems Forbes is concerned as well.  In their article The Biggest Threat To Obamacare Is Already Written Into Law: No Insurance Industry Bailouts they point out:


  • How things have changed. Today, Democrats in Congress and the Obama administration are desperate to do something you may find surprising: give the insurance companies more than about $2.5 billion in bail out money. That’s not a misprint. They want to take tax money from people who already think their premiums are too high and their coverage too skimpy and give it to the very “villains” they were excoriating only a few years ago.
  •  Under a program called “risk corridor” insurance, the federal government pledged to redistribute money from insurers who made profits to insurers who incurred losses for a period of several years. The reason: the insurance industry was so uncertain about the outcome of the (Obamacare) health insurance exchanges that they insisted on a backup mechanism to protect themselves.
  • Yet last year’s appropriations bill, largely at the insistence of Sen. Marco Rubio, requires that the risk corridor payments be revenue neutral. In other words, any payment of funds to an insurance company suffering from a deficit must come from insurance companies who earned a profit. There can be no net transfer of taxpayer funds to the industry.
  • As Heather Higgins and Hadley Heath Manning explain at National Review, the Rubio provision expires at the end of this year. If the federal government is to continue to be constrained, it must be renewed in this year’s Omnibus spending bill. And in negotiating with Congressional Republicans, the White House has made it clear that being able to bail out insurers is its top priority.
  • If the risk corridor language is stripped from the Omnibus, insurers who are implementing Obamacare will feast on roughly $5 billion or more of corporate welfare ($2.5 billion for the 2014 plan year and probably at least that much for the 2015 plan year), and they will go into the spring bidding process confident that the government will slip them billions if they continue to play ball with the Administration.
  • Further health policy analyst Chris Jacobs has raised the possibility that the administration could try to pay the insurers anyway — even without congressional approval: Acting Centers for Medicare and Medicaid Services (CMS) Administrator Andy Slavitt … released an unsigned memo just before Thanksgiving pledging eventually to hand over the $2.5 billion in 2014 risk corridor payments insurers requested, but did not receive. Now, the Administration “is recording those amounts that remain unpaid…as fiscal year 2015 [sic] obligation of the United States Government for which full payment is required.”

This, ladies and gentlemen, is your government at work.

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  1 comment for “The Health Insurance Bailout

  1. Steve O'
    December 14, 2015 at 8:30 am

    Hmmm… capitalism has made healthcare too risky for the for-profit 2big2fail megacorps, but it’s wasting too much money on the inefficiency of doctors and clinics and hospitals…

    Maybe we should get rid of the antiquated “patient-based care” and just turn it into a revenue sharing program. Government can pay the for-profits directly, and tax any unspent earnings. Gets the uncertainties (patients) out of the way.

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