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White House vow: No Obamacare bailout

The Affordable Care Act's 'risk corridor' provisions for insurance companies comes under fire from a Republican senator.

By Money Staff Mar 7, 2014 1:37PM

This post comes from Joshua Green at partner site Bloomberg BusinessWeek.


Bloomberg BusinessWeek on MSN MoneyOn Thursday, Bloomberg News health-care reporter Alex Wayne noticed that the new White House budget includes $5.5 billion in potential payments to insurance companies that suffer losses under Obamacare -- a scenario that Republicans such as Sen. Marco Rubio, R-Fla., have branded a "bailout."


Last November, Rubio introduced legislation to abolish "risk corridors" contained in the Affordable Care Act, which are essentially temporary shock absorbers that help insurers transition to the new system by limiting the risk they’ll face in setting prices for a new market. As I’ve explained, risk corridors function a lot like Major League Baseball’s profit sharing: Insurers that wind up with a healthier-than-anticipated applicant pool and lower costs will turn over some profits to the government, which in turn will pay money to insurers that end up saddled with costlier-than-expected applicants.


Medical doctor © CorbisGiven the law’s rocky rollout and Obama’s decision to let young, healthy people temporarily keep their bare-bones plans (a decision he extended on Wednesday for another two years), it stands to reason that there may be more "losers" among insurers than previously anticipated -- and that this might warrant a net payout from the government.


"I do think both factors tilt the odds toward the government sending more money to insurers under risk corridors than they're taking in," says Larry Levitt, a health-care expert at the Kaiser Family Foundation. Given the political potency of the "bailout" label, Rubio looked to be onto something, and the many Republicans who repeated the charge seemed to agree.


The White House seems to agree, too.  In a call with reporters late Wednesday, senior administration officials announced that they’re adjusting the risk corridor program to be "budget neutral." But they haven't made clear how they'll make sure enough money will come in from insurers to avoid taxpayer-funded payments. White House officials presented this change as just another minor adjustment to help insurers and customers adapt to the new law. Nothing to see here, folks! What this change really does is blunt Rubio’s attack by apparently guaranteeing that an "Obamacare bailou"” cannot occur.


That didn’t stop Rubio from offering a parting shot. "The Obama administration all but acknowledged today that Obamacare's risk corridors are open-ended and needlessly expose taxpayers to bailing out health insurance companies," he said in a statement. "Given the Obama administration's track record of bending, breaking, and rewriting Obamacare, they should make this move permanent through the legislative process."


Whether or not rejiggering the risk corridors helps insurers or their customers, it should go a long way toward helping embattled Democrats.


More from Bloomberg BusinessWeek

29Comments
Mar 7, 2014 2:03PM
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Obamacare (Affordable care act) - just a continual stream of open ended costs and failure all for the benefit of so few (many who are wealthy people who don't even need the premium credits) - all in furtherance of Socialism right here in America.  Unbelievable.   Actually, it wouldn't be bad but for the fact that Socialism has historically failed so many times yet we continue down this path to destruction.
Mar 7, 2014 3:09PM
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A bailout... any bailout... would be an admission of Obamacare (ACA) failure. Do you honestly believe this administration is going to admit failure/fault on ANY level???????
Mar 7, 2014 3:53PM
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The ACA is a LAW. It was voted on and passed by Congress. How is it that the President can make changes to a law without congressional approval? I've never heard of any President changing a law as he sees fit. Any change to any law must go through Congress. Why aren't more people up in arms over this?
Mar 7, 2014 3:40PM
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"senior administration officials announced that they’re adjusting the risk corridor program to be "budget neutral.""

And if you believe that, you can keep your existing plan.
Mar 7, 2014 3:48PM
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Barack Obama has not told the truth one time in the last five years (and probably before that) and I have no reason to believe he is going to start now.  Everything he is saying right now is an election year smoke screen. There will be bailouts for ACA and there will not be tax breaks for the middle class. Any one with a working brain knows the middle class will be the ones paying when the ACA subsidies come due.

 

My biggest concern right now is that the number of people who are so blinded by party politics and race added to the number of people who are just plain stupid enough to believe what he says will add up to a big enough group to sway the vote in November.  If the democrats who still follow our idiot in chief retain control of either house America's destruction from the inside out will continue.

 

So to democrats, if you still want a chance in the future of democrat leadership your best bet is to team with republicans to oust this wanna be dictator and all his brainless minions.  Even so it's going to take a long time to undo the damage he has done.

Mar 7, 2014 3:03PM
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".....and if you'll believe that, I'll throw the Golden gate in for free!!"
Mar 7, 2014 3:31PM
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All congressmen (Republicans and Democrats) seem to love their government healthcare so either give us the same healthcare they have or help create a truly free market for insurance. The health insurance marketplace before the ACA was not truly a free market as in most regions you were given very few choices and the dominant insurance companies had most congressmen (both Republicans and Democrats) on their political contribution payroll.
Mar 7, 2014 5:44PM
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obama also vowed that if you like your doctor you can keep your doctor.

 

obamas word is worth less than sh!t

Mar 7, 2014 5:17PM
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Obamacare is a complete and total scam.  I beleive it is basically there to kill/ allow to die sick peopleand decide who gets what treatment.  That 68 year old woman who needs a hip replacement will get morophine and a wheelchair instead.  That 57 year old man who needs a new heart valve Nope!!!  They are going to let him die and his Social Security will be absorbed. It is a method of control and depopulation.  Its sole goal is to end private health insurance and force everyone on to the public insurance dole.  They passed it without knowing what was in it and everything the President sold us on is a total lie.  I think it is a way for them to extend the criminal Federal Reserve system which is broke. There is no way we will ever pay off 17 trillion in debt.  They want to gravitate into 1 currency/ 1 world government.  It will be Orwellian 1984 within 10 to 15 years.
Mar 7, 2014 4:05PM
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It won't become necessary until that j ackazz is out of office. That's how it was planned. 
Mar 7, 2014 6:34PM
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So now we see a major reason that health insurers were so welcoming of Obamacare . . . it has automatic bailout provisions for any company that might suffer a loss in the next one, two, five or however many years it takes to "stabilize" this beast!  Sweet deal.

No word as to how any loss is to be justified, so I guess if it's just due to poor management or inefficient workers, a health care company gets bailed out anyway if they are selling Obabacare policies by claiming that's what caused their losses.

As for the White House vow stated in the headlines, I guess this is as credible as the President's vow "If you like your current health plan, you can keep it."
Mar 10, 2014 11:02AM
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I was loosing money in my business and I had to close down . How come I couldn't get a bailout ?
Mar 9, 2014 6:55PM
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Obama is a stand up guy,that`s for sure.If you`re fair you`ve gained a lot of respect for him.
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