The Patriot Post® · Hope 'n Change: The Big Insurance Bailout

While a lot of conversation is percolating about ObamaCare being the gateway to a single-payer health care system such as those strangling Canada and the United Kingdom, there’s another financial concern for the interim and it involves those insurance companies allowed to participate in the various federal and state exchanges. Few can escape the fact that health plans now feature higher premiums and deductibles than the ones we were supposed to be able to keep if we liked them. Since there’s such a disincentive to purchase, Democrats had to ensure that insurance companies would survive. That requires the right incentives and enough taxpayer money to make it worth their while.

Charles Krauthammer shrewdly points out in a recent column that Sections 1341 and 1342 of the Patient Protection and Affordable Care Act provide a means for the federal government to bail out insurers who are seeing the coveted youth market decide to forgo coverage while those who can afford the coverage thanks to massive federal subsidies tend to be older and sicker. In a normal market, this would be a recipe for failure.

But Section 1341, writes Krauthammer, provides for a $20 billion “reinsurance” fund over the next three years while Section 1342 allows insurers who have costs as little as 8% over a predetermined “target” amount to recoup 80% of these excesses. As Newt Gingrich notes, “This is a system that encourages the insurance companies to be unrealistic about their risks because you the taxpayer are set up to cover their mistakes.”

As Krauthammer sees it, the solution would be to excise both these bailouts from ObamaCare, either as a standalone measure or as an amendment to the upcoming debt ceiling bill. In the current political climate, though, the question is whether GOP leadership would carry through with such a fight.