Obama’s Latest Bailout For Big Insurance Aims To Cover His Lies

obama (7)from – The Federalist – by Christopher Jacobs

It never rains that it doesn’t pour. Even as nonpartisan experts at the Government Accountability Office concluded that the Obama administration broke the law with Obamacare’s reinsurance program, the Washington Post reported the administration could within weeks pay out a massive settlement to insurers through another Obamacare slush fund—this one, risk corridors.

The Post article quoted Republicans criticizing risk corridor “bailouts.” But in reality, the Obama administration itself has admitted using risk corridors as a bailout mechanism—trying to pay insurers to offset the costs of unilateral policy changes made to get President Obama out of a political jam. These two interlinked bailouts—one political, the other financial—explain this administration’s rush to pay off insurers on its way out the door.

Let’s Go Back to 2013

To understand the risk corridor story, one must head back to fall 2013. Millions of Americans received cancellation notices in the mail, informing them that their existing health insurance would disappear once Obamacare’s major provisions took effect. Those individuals also faced long odds to buy replacement policies, given that healthcare.gov and related insurance exchanges remained in a near-constant state of meltdown. Amid the controversy, President Obama had to apologize publicly for misleading the American people with his “like your plan” pledge—which Politifact later dubbed the “Lie of the Year.”

To fix the problem, the Centers for Medicare and Medicaid Services (CMS) tried a stopgap solution. Essentially, CMS said it would ignore the law’s requirements, and allow people to keep their prior coverage—albeit temporarily. States and insurers could allow individuals who purchased coverage after the law’s enactment, but before October 2013, to keep their plan for a few more months (later extended until December 2017). The final paragraph of CMS’ November 14, 2013 announcement of this policy included an important message:

Though this transitional policy was not anticipated by health insurance issuers when setting rates for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue. We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.

CMS offered insurers a quid pro quo: If you let Americans keep their existing plan a little longer—getting the administration out of the political controversy President Obama’s repeated falsehoods had caused—we’ll turn on the bailout taps on the back end to make you whole. You scratch my back…

I’ll Pay You Tax Dollars to Play

But this arrangement created several problems. First, CMS cannot decide that it just doesn’t feel like enforcing the law. In a paper analyzing the administration’s implementation of Obamacare, University of Michigan professor Nicholas Bagley called the non-enforcement of the law’s provisions “bald efforts to avoid unwanted consequences associated with full implementation of” the law. He argued the administration’s inaction abdicated the president’s constitutional obligation to “take care that the laws be faithfully executed:”

The Administration thus used the public pronouncements of its non-enforcement policies to encourage the regulated community to disregard provisions of [the law]. Prospectively licensing large groups of people to violate a congressional statute for policy reasons is inimical to the Take Care clause.

While disagreeing that “President Obama has systematically disregarded” the text of the statute, Bagley explicitly conceded that—with respect to the “like your plan” fix and other administrative delays—“the President appears to have broken the law.”

That law-breaking brought with it major financial implications. While healthy individuals kept their existing plans and stayed out of the Obamacare risk pool, sicker individuals signed up in droves. Because the Obama administration unilaterally—and unlawfully—changed the rules after the exchanges had opened, insurers found they had substantially under-priced their products. A 2014 House Oversight Committee report found major impacts after the administration announced the “like your plan” fix:

Insurers immediately started lobbying for additional risk corridor payments, meeting with and e-mailing Valerie Jarrett the day after the Administration’s announcement;

Insurers actually enrolled many fewer young people, and many more older people, than their original estimates made before the Exchanges opened for business on October 1, 2013—consistent with other contemporaneous news reports and industry analyses; and

‘One insurer told the Committee that it expects greater risk corridor receipts because of a sicker risk pool than it anticipated on October 1, 2013 due, in part, to the President’s transitional policy.’

All these developments are entirely consistent with CMS’ November 2013 bulletin announcing the arrangement. CMS pledged to use risk corridors to make insurers whole because it knew insurers would suffer losses as a result of the administration’s unilateral—and illegal—“like your plan” fix.

How About You Pay for Me to Break the Law

To sum up: The administration conjured a political bailout. It pledged not to enforce the law, so people could keep their plans, and President Obama could get off the hook for misleading the American people. This necessitated a financial bailout through risk corridors. Actuaries can debate how much of the unpaid risk corridor claims stem from this specific policy change, but there can be no doubt that the “like your plan” fix increased those claims. CMS itself admitted as much when announcing the policy.

Ironically, Bagley admits the first bailout, but denies the second. His paper concedes the “like your plan” violated the law, and the president’s constitutional duties, largely for political reasons. But hebelieves the administration can, and should, pay outstanding risk corridor claims using the Judgment Fund. All of this raises an interesting question: Why should the executive be allowed to break the law, abdicate its constitutional obligations, and then force Congress—and ultimately taxpayers—to pay the tab for the financial consequences of that lawbreaking?

The answer is simple: It shouldn’t. While insurers stand in the middle of this tug-of-war, they could have acted differently when President Obama announced his “like your plan” fix. They could have cancelled all pre-Obamacare plans regardless of the president’s announced policy, demanded the opportunity to adjust their premium rates in response, pulled off the exchanges altogether, taken legal action against the administration—or all of the above. They chose instead to complain behind closed doors, get their lobbying machine to work, and hope to cut yet another backroom deal to save their bacon.

But there are two political parties, and two branches of government. To say that Congress should have to write bailout checks to insurers as a result of the executive’s lawbreaking quite literally adds injury—to taxpayers, to the legislative power of the purse, and to the separation of powers—to insult. Any judges to whom the administration will try to bless a risk corridor settlement with insurers should ask many questions about the linked bailouts motivating this corrupt bargain.

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Loren Nelson
6 years ago

I would say, “it’s about time Congress took action to put a stop to this lawless President but they won’t! They are just as bad as he is when it comes to hoodwinking their constituents and playing the “good old boy” games. It’s time to elect Trump and start the process of overhauling the Congress and The Lifetime positions on the Supreme Court who roll over and play dead for the whims of the liberals and their Lobbyists.

6 years ago

And, of course, he will get away with all of this with a few sweet words and he will be able to walk his dog with us, (Joe Six-Pack) public accepting it all.
Impeach him . . . no . . .can’t . . . he’s a demorat!

Gregory Anderson
6 years ago

Impeach !! the RINOs in the House just can’t find their ‘gumption’ to actually do their jobs. This president has broken just about every tentent of the U.S. Constitution and yet Congress sits back waiting until the day they leave and collect the fat pension and healthcare for the rest of their lives.
November, hopefully, will be a wake up call for the RINOs. Trump 2016!

6 years ago

If you break the law you go to jail. Why has the Obama Administration been able to steal and not held accountable??

6 years ago

Must Folks Don’t Know That In The First 6 months Of The Passage Of The Bill One Thing Was Voted Out!!! Do You Know That In The Bill Anybody That Sold Anything For More Then $600.00 Had To Fill Out A 1099!! Yes Lowes ,Home-depot, Car Dealers Need I Say More.Yes Even A Congressman Here In NC Didn’t Know This. This Is Why He Is No Longer A congressman.

6 years ago

Obama has been replacing capitalism with socialism ideas for socialize medicine since 2010. Making Americans depended on government welfare for everything…like other countries in Europe and third world nations do.

I have a few other comments that I been waiting to say about this idiot man.

He’s using the power of the white house to subvert his ways to counter our Christian faith set by the founding fathers. He is using his bi-racial heritage to bully people into his beliefs and ways…he is using his covert Muslim religion as a prop to build more mosque across this nation, in support of the underlying push of terrorism against this great country of ours.

He has only a few months left to set his agenda and finalizing his legacy as the first white/black president…if he is the example of what a person of color is suppose to be with absolute power, I’ll definitely not vote for that future leader.

One more thing, I was born a bi-racial male (not white/black) so, I understand the negative connotation of not being a white person and privileged in this country. I retired from the military because of him and his policies! He overturned the standard of decency in this country by turning the military into a sodmized society…shameful & godless leader! He will pay for his sins…

mickey c ross
6 years ago

Why is the American people so blind not to know what’s going to happen to their country if Hillary is made president….I thought that the American people was fed up with Obama,and now there Hillary and more than likely worst….its like a woman that her husband is so mean to her so she goes and gets a divorce only to marry another that’s worst than the last….it just don’t make sense

6 years ago

Mark my words he will get away with it. Just like Hillary has gotten away with the email scandal

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