Taxpayers Are Bailing Out the Insurance Companies—to the Tune of $1 Billion This Year Alone!

October 14, 2014

ParaObamaCare was crafted to suit the largest insurance companies, and now your tax dollars are subsidizing them.
The House Oversight Committee has issued a report called “ObamaCare’s Taxpayer Bailout of Health Insurers and the White House’s Involvement to Increase Bailout Size.” The report states that ObamaCare contains $1 billion in bailouts in 2014 alone for insurance companies who offer coverage in the individual and small group market. The subsidies are set to expire in 2016.
The report details the extent of the cooperation between various agency officials and the insurance companies. It outlines three bailout programs, and their cost to taxpayers:

  • The Reinsurance Program subsidizes any “expensive medical claims” from enrolled individuals. This subsidy is funded by a fee paid by nearly everyone who has health insurance. The amount of the fund is set by statute: $10 billion in 2014, $6 billion in 2015, and $4 billion in 2016.
  • The Risk Corridor Program pays insurers when they lose money on the plans they sell in the individual market, which puts taxpayers at risk for a potentially unlimited bailout. In this subsidy, money is transferred directly from taxpayers to insurers.The Congressional Budget Office (CBO) estimated that the Risk Corridor Program would decrease the federal budget. Skeptical of this claim, the Committee on Oversight and Government Reform surveyed fifteen insurance companies and twenty-three ObamaCare co-ops (representing about 80% of people enrolled in the exchanges), and found that their projections differed significantly from the CBO’s. They expect Risk Corridor payments of about $725 million directly from taxpayers in 2014, about one-third higher than in 2013. Extrapolating these estimates for the entire population enrolled in health insurance exchange plans, taxpayers may be on the hook for upwards of $1 billion in 2014 alone. Many companies deliberately underpriced their plans in expectation of this bailout.
  • The Risk Adjustment Program transfers money from plans with healthier individuals on average, to plans with sicker individuals. Although ObamaCare is required to be budget-neutral, more insurers expect to receive more payments than they make. This past May, the companies surveyed by the Committee were expecting 2014 net payments through the Risk Adjustment program to be about $346 million—nearly twice as much as they received 2013.

The report finds that the size of the bailout is a combination of two factors: an enrolled population that is less healthy than insurers initially expected, together with provisions in the legislation that make those bailouts generous. After the Obama Administration announced that payments would be implemented in a budget-neutral manner, they were lobbied heavily by insurance companies, and the reimbursement formula was tweaked to satisfy 80% of insurance companies’ demands, according to communications between administration officials and various insurance companies.
What do patients who prefer alternative and integrative medicine do for coverage? We’re on our own. The insurance offered on the exchanges does not provide coverage for CAM, and by and large natural health proponents do not use many of the services covered by insurance—yet we are are forced to support these costs through our tax dollars anyway.
CAM consumers may prefer to purchase a high-deductible insurance plan in conjunction with a Health Savings Account. We were concerned that these programs might disappear under ObamaCare, but fortunately—likely due to grassroots activism from people like you—they survived and remain the best option.

20 responses to “Taxpayers Are Bailing Out the Insurance Companies—to the Tune of $1 Billion This Year Alone!”

  1. Joan Hobbs says:

    Would appreciate a list of health care plans for a natural lifestyle. The last link opened to no data available.
    Thank you.

  2. Suzanne Hachey says:

    I grew up with medical care provided by the Air Force. Seriously miss the simple no-nonsense approach to care. We are not insured now because we stay healthy, eat healthy, and drink lots of plain water- no soda, lattes, or other big business stuff !!!!! We need national healthcare, not any type of insurance programs!!!!! Us hardworking family’s should not have to pay into a “Plan” costing over 10x’s what we normally use. It penalizes the healthy in order to subsidize the lazy-fast food-eating public. You do realize that the public health is the leading cause of deaths? Forget Guns, only 2% die or are wounded by them. We need to tax junk foods and educate the school kids about real food. All natural foods are so hard to find now. You have to pay a premium for organic. Now that is where my tax dollars should go to!!!!! Pay big business to go all organic. Just wishing. I know the bureaucracy will kill that. No profit in healthy people I guess. So sad.

  3. Michael Keudel says:

    This story is very misleading as those costs are mostly paid by the insurance companies themselves and then passed back and forth between thee same companies, and $1 Billion is chump change for a program this massive. Medicare Part D was enacted with ZERO provisions to pay for it, this was partially fixed with the ACA, otherwise the taxpayer would still be on the hook for hundreds of Billions we used to pay out for Medicare Part D signed into law by George Bush. Premiums this year have stayed flat, while some have even dropped in price already. New programs take time to stabilize, just like Social Security needed a boost when first created, and Medicare needed a boost to get going. The costs we used to pick up for people using the ER was also much larger than $1 Billion dollars. this money is being used so US citizens can have health care, its not being used to drop bombs on people or to burn in a large furnace or kill people. The ACA is not perfect, but its a step forward that helps people finally to get medical necessities, helps people avoid medical bankruptcy, keeps the insurance company from canceling your policy when you get sick, eliminates lifetime caps, and forces them to also spend at least 80% on actual medical needs or issue you a refund. They’ve already issued over $10 Billion in refunds. So again, $1 Billion is peanuts in what we’ve already saved with the law.

  4. Gene Elliott says:

    As one who has had one relative killed by AMA doctors prescribing conflicting Rx’s and who almost lost my teenage daughter due also to multiple AMA doctors prescribing incompatible Rx’s (because they don’t check out side effects first before prescribing), I vehemently object to the way Medicare is directed to treat us now. This is criminal!
    Personally, I have a difficult to diagnose condition and I’ve had to learn how to treat myself for over 40 years. Therefore, I very seldom go to an AMA doctor but rather subscribe to several alternative medicine periodicals and books. At 80 years of age, I take no Rx’s but do take vitamins and minerals, etc. I almost never catch a cold and if I do, I certainly don’t take Rx’s with all of their sometimes deadly side effects. I can still climb up a mountain path as well as the younger set.
    Big Pharma too often forces our doctors to push their expensive and dangerous products. We need to fight for better health care rather than what untrained gov’t. personnel think we need.

  5. Ceazar says:

    Now we understand why you could NOT keep your existing health plan. All those people cancelled “because their plan did not meet the new standards” were a liability to insurance companies if their care cost more than what the insurer collected. Now they are covered under Obamacare and taxpayers get to fit the bill for those who are not profitable enough for the insurance company. I love how companies midigate risk these days. Let the gov’t cover the risk. Worked to midigate the risk for flood insurance, vaccines, home loans (Feddie/Fannie Mae) etc.

  6. Diana Jackson says:

    I object to the political bias of this article and its timing to get out just before an election. IMO you are misusing your organization’s mailing list and influence to argue this issue unobjectively. Just for starters, any report put out by the government is suspect, but especially one from a House committee controlled by one party. If you continue in this vein I will unsubscribe and ask my friends to do the same.

  7. Star Star says:

    i am stil outraged and disgusted that the traitors to us; (‘we the people’ ); in congress who are again stealing our tax money to give to the parasite overlords of the death-for-profit corpocracy, continuing to enrich the rich and harm and further impoverish the poor and working class wage slaves. it is disgraceful that the safer alternatives to the mass murdering pharmaceutical corporations are being robbed of funding and that the overlords are stealing even more of our choices and freedoms and further undermining free market entrepeneureial holistic and natural health services in the rush to fascist rule. universal health care would give government the ability to reign in parasitic greed and negotiate fair prices and wages and loosen the death grip on the ponzi scheme called insurance.
    death to the death-for-profit corpocracy!!!
    justice or revolution!!!
    learn from history!!!

  8. brad roon says:

    Big Picture here, folks. IF this O-bomb-ya-care worked then essentially everyone would be covered. If everyone is covered there is no more crapshoot/roulette as to whether one’s treatment is or is not approved.
    Thus insurance is totally unnecessary. If ALL insurance money were paid to the medical community – and i mean ALL the medical community including naturopaths, chiropractors, etc, NOT just allopath fools and misguided untrained chemical pumpers.
    If everyone gets treated you need no insurance because you get fixed. It’s like having a car that runs and paying a battery fee every day.

  9. Who are the real criminals in this country? And another corporation ” skimming” $$$$$$$$$$$$ from We The People. When does this madness end? When is enough enough for the wealthy”takers”?.

  10. Lloyd Downs says:

    Citizens never got a chance to debate to create a Medicare type insurance for the nation, also called a single payer plan.
    Most Americans think insurance companies are crooks. Obama’s plan has taken away some of this risk and has some good features, but it is not Single Payer.
    Insurance companies have had their opportunity to provide health coverage but have failed at it.
    Lloyd Downs

  11. The House Oversight Committee is not a particularly reliable source on this subject, being that the House has voted dozens of times to repeal the ACA entirely.
    You may or may not realize that there is language in the ACA that requires non-discriminatory coverage of at least some CAM treatments. We need to push to get this followed more widely. Here in New Mexico, plans sold on the exchange do cover acupuncture and chiropractic, though copays are often inordinately high. Your statement “The insurance offered on the exchanges does not provide coverage for CAM” is only partially true. I have patients myself who have these plans and I’ve been paid through them for acupuncture.

  12. Clifton miculka says:

    We need to come together now more than ever ! They are crushing our civil liberties everyday ! The biggest problem is finding someone , not a Party , that will really work for us and not corporate America !

  13. Joy Williams says:

    While this is a very informative article, I continue to disagree with the use of the term “Obamacare.” It is an unprofessional epithet. I will have more respect for ANH-USA when they use the proper term for this legislation,which is the Affordable Care Act (actually, it’s the Patient Protection and Affordable Care Act”). You can at least educate people with proper terms, there is enough stupidity already going around. Thank you.

    • Dogtowner says:

      Very good point, Joy. Why call it other than what it is? The Un-Affordable Care Act.

      • Erik Stark says:

        Obama himself has co-opted the once offensive term used by conservatives and says he is happy to call it Obamacare and has referred to it as that on a few occasions.

  14. MooseThomasazi says:

    Isn’t this why we need the single payer system? Medicare and Medicaid are in place so use this system. Let’s get rid of the private end and become more efficient. Corporations want to make huge profits, period. Big business is not a friend of the American consumer. If I am wrong, give me the evidence to prove it. (Big pharma, hospital charges, surgical charges, major illnesses, etc.?) We must continue to improve Obamacare – it is the only way middle class and the poor in this country will have healthcare.

    • Tim says:

      You speak to the very reason why the system is not about providing healthcare, but instead is providing medical care, which is not the same thing. The medical care system is controlled by Big Pharma, in conjunction with Industrial food, etc. such that they have decidedly unhealthy food, environment and care regimes that set up citizens to develop chronic dis-ease which symptoms can then be “treated” until they die. As long as the USDA subsidizes the wrong foods (corn, soy, etc for industrial processing) instead of organic whole foods, and authorizes the dumping of billions of tons of pesticides on GMO crops; and the focus of the FDA and AMA is on treating the symptoms of disease, instead of focusing on creating healthy life styles in the first place, we will be wasting tax dollars and the health of our nation.
      So we are already “bailing out Big Pharma, Big Chem/Ag, Big food and big Medicine all to the detriment of the middle class and poor in the country. And why do you think that SOME of the Medical Care industry supported the “Affordable Care Act”? So they could get more “bail out”. They can get paid for overcharging for a medicine that improves the patient condition 30% (not counting the side effects, for which they get to provide more “medical care”) as opposed to working with the patient to change lifestyle (the system doesn’t pay as well for doing that) that would improve the condition 70% and possibly get them off the drugs all together.

      • ProWorkingClass says:

        very good and accurate! the entire system has become an organized cartel of private corporate interest. Our government has long ceased to exit. It is no longer by the people, of the people, for the people. looking closely at it, it has been reduced to a debt collection agency. The Federal Reserve System, which is private issues debt money, the huge bureaucracy overspends, the IRS collects tax on sweat labor and everything else, the law is rigged in favor of the wealthy, the corporate culture dominates and rules, the military enterprise sucks in most of the nation’s wealth, and all that comes at the expense of the average citizen who pays for all the above. There is no way to reform the system as the scale of corruption is beyond imagination, and there is no effective way to fix it. Laws are made behind close doors, and citizens have no way to evaluate it. The representation system is a big joke as most citizens are uninformed and have no meaningful relationships with their representatives. In sum, we are ruled by a dictatorship oligarchy that decides our fate. The separation of powers is another big joke. The major three branches are actually 3-in-1. When you stand in front of the judge and tell him how unfair the law is, the judge is so quick to point out that his job is only to apply the law and that if you do not like the law, you should contact your representative! Your own lawyer would even tell you the same thing! Without massive and well-organized civil revolt which must be accompanied by wide scale jury nullification, where the law stops operating as an oppressive tool, there will be nothing to change. The war on guns is based on the anticipation that citizens will eventually get sick of this treacherous system and revolt with their guns! I personally do not believe in violent revolutions, but if civil unrest becomes overwhelming, this oligarchy government will use violence to end the revolt. You can bet your life on it.

    • Chip Dooley says:

      What middle class? Most jobs have been minimum wage jobs add very little middle class jobs. You must be poor like me or rich because my insurance has double while my kids are free and ex and hubby are paying 900 just for the 2 of them and they are 40. Heck when we where all paying for insurance for all of us it was less than 4oo a month same policy now is over 2000. The only ones who think it’s fair are the ones who don’t pay for it, 5 million people out of 311 million people help what less than 5% of Americans, real good for America. give me, give me and take, take, take, but who pays? not me I am poor, umm TAX PAYERS pays that’s who, some thing for nothing is never free, someone pays for it and it’s not the rich.

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