By: Marilyn Assenheim
On Monday The Weekly Standard released another surprise from the midden heap that is Obamacare: “Robert Laszewski—a prominent consultant to health insurance companies—recently wrote … that, while Obamacare is almost certain to cause insurance costs to skyrocket even higher than it already has, ‘insurers won’t be losing a lot of sleep over it.’ How can this be? Because insurance companies won’t bear the cost of their own losses—at least not more than about a quarter of them. The other three-quarters will be borne by American taxpayers.”
Mr. Laszewski is in a position to know. His Health Care Policy and Marketplace Review, published last week, exposed another, previously overlooked, bailout in the laughably named Affordable Care Act. The Act’s regulations currently consist of 12 million words designed to obfuscate its real agenda; transforming Obamacare into a single-payer system. What makes this bailout so treacherous is that it is intended for the insurance companies Obamacare is so desperate to snare. Without the complicity of insurance companies, the downward spiral that The Lyin’ King’s signature edict is on will continue until the Act crashes and burns under the weight of its own incompetence. What Mr. Laszewski has uncovered, however, makes such an inevitability less likely.
Mr. Laszewski outlines what the regime is euphemistically refers to as a “risk management program.” But the program doesn’t “manage” risk to you: “Obamacare contains a $25 billion federal risk fund set up to benefit health insurance companies selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market.” How does it work? According to Mr. Laszewski :“The government’s risk management program for the insurers has three parts:
- A revenue neutral Risk Adjustment System designed to level adverse claim costs between health plans.
- A Reinsurance Program that caps big claim costs for insurers (individual plans only).
- A Risk Corridor Program that limits overall losses for insurers.
First, the Reinsurance Program caps big individual claim costs for insurers––in 2014, 80% of individual costs between $45,000 and $250,000 are paid by the government…
Then comes the Risk Corridor program. Participating health plans will receive payments from the federal government in any of the following circumstances:
- The plan’s costs for any benefit year are more than 103% …The feds will reimburse 50% of all costs in excess of 103% of the medical cost target.
- If the plan’s costs are more than 108% of the annual target, the feds will first pay the health plan a flat 2.5% …then reimburse the plan for 80% of their claim costs above the targeted amount––with no upside limit.”
In other words, you are not only expected to pay for your own Obamacare premium but 80% of any cost participating insurance companies experience.
This dodge would cozen enough insurers, desperate for their own survival, to flock to Obamacare’s banner. The problem for insurers is contained in the second part of the risk management program…according to the Health Care Policy and Marketplace Review report: “The fund lasts only three years: 2014, 2015, and 2016.” It’s a safe bet, however, that an adequate number of insurers might embrace such a temporary lifeline, slippery as it may be, gambling that in three years time anything might happen. Unfortunately for America, three years is plenty of time for the canker of Obamacare to have wormed its way into the heart of the nation’s fabric; entitlement programs with any longevity whatsoever are difficult to dislodge. Impossible, if one goes by past history. America has never freed itself from a single entitlement program.
The Weekly Standard recommended two courses of action: “First, Republicans should attach a no-bailout provision to any debt-ceiling increase…along with a provision delaying Obamacare’s liberty-sapping individual mandate …Second, Obamacare needs to be comprehensively repealed in January 2017, not modified or ‘fixed’…” Unlikely. Establishment Republicans have proven to be as numb to America’s wishes as Democrat statists.