ObamaCare 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.