Government & Politics

More ObamaCare Abominations

The real action, including outright law-breaking, is occurring behind the scenes.

Arnold Ahlert · Mar. 10, 2016

While Barack Obama has been busy touting the ostensible success of ObamaCare, the real action — including outright law-breaking — is occurring behind the scenes.

Last week, Health Republic Insurance of Oregon filed a class action complaint against the Obama administration in the U.S. Court of Federal Claims in Washington, DC. The company, one of the 23 original non-profit, consumer oriented and operated insurance plans, closed its doors at the end of 2015, leaving thousands of customers in the lurch. They did so despite receiving $60.6 million in taxpayer-backed loans. Now they are seeking $2.5 billion, and Health Republic CEO Dawn Bonder hopes other insurance providers will join to win as much as $5 billion.

All of this has to do with one of the trio of cost buffers known as Risk Adjustment, Reinsurance and Risk Corridors. Though the details are somewhat arcane, the dewy-eyed premise is that insurance providers more profitable than “expected” would help defray the costs insurers less profitable than “expected,” and that an approximately equal number of both would cancel each other out.

If not — and this is the kicker — the government, a.k.a. the American taxpayer, would underwrite any shortfall.

The first inconvenient reality intruded in 2014. A provision in the CRomnibus budget resolution required the Risk Corridor program to be “revenue neutral,” meaning the Centers for Medicare and Medicaid Services (CMS) could not use any other funds to bail out the insurance companies. At first the administration didn’t care, confident that the offset formula would not only be successful but actually produce a net gain of $8 billion.

Enter reality. Last October, CMS announced that it could pay only 12.6% due to the next inconvenient reality: Overly profitable insurers “contributed” only $362 million to pay the whopping $2.87 billion shortfall owed to losing insurers. For Health Republic, that constituted a financial hit of $20 million. And Health Republic was hardly an anomaly. A staggering 22 of the 23 original co-ops lost money in 2014, and 11, in addition to Health Republic, have closed.

Health Republic insists the funds owed represent “express and binding obligations,” but Congress further clarified the limits placed on CMS in “a parallel set of riders that prohibited the Government from paying risk corridor amounts” from other sources, in a 2016 spending bill. “We don’t have anything to lose here given our current status,” Bonder said, “so we can be a force to put a mechanism in place to rectify” the risk corridor changes.

More like a force determined to usurp the role of Congress, seemingly insisting it had no right to pass a provision limiting taxpayer exposure to ObamaCare’s schemes and dreams.

Unfortunately, Health Republic’s contempt for Congress is shared by Obama and his particular penchant for unilaterally re-writing any part a law. Thus it comes as no surprise the administration announced on Feb. 12 that it would hand out $7.7 billion to the insurance companies in 2016 alone — a figure that included $1.7 billion in illegal payments. The first $6 billion was raised from a fee on private health insurance, but the other $1.7 billion belongs to the U.S. Treasury. Giving it to insurance providers clearly violates section 1341 of the health care law that states “money shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program established under this section.”

This isn’t the first time Obama pulled off this caper. In 2014 the reinsurance program came up $2 billion short and the administration stiffed the Treasury out of that sum to add it to the $10 billion it paid insurance providers. Thus in just two years the administration has “diverted” a total of $3.5 billion from Treasury’s coffers in direct contravention of the law.

It gets worse. According to the House Energy and Commerce Committee, an additional $5 billion has been paid to insurance companies from a federal fund intended for tax refunds. The Obama administration did so after making a request to Congress — that was never approved — to use the funds for that purpose. That brings the total of known illegal funding to $8.5 billion, all of which is aimed at keeping Obama’s “signature achievement” from crashing and burning — no matter what it takes.

Yet all of it ultimately amounts to nothing more than the proverbial re-arrangement of Titanic deck chairs. That’s because in 2017, the Risk Corridor and Reinsurance provisions of ObamaCare expire, and insurance companies will be forced to charge real-world premiums for real-world ObamaCare mandates. A study released in 2014 by University of Minnesota’s Medical Industry Leadership Institute, reported in The Wall Street Journal, reveals what is likely to happen:

“Bronze plans could increase 45% for families, to about $13,000 from $9,000. Individuals could see a 96% spike, to nearly $4,000 from $2,000. Other plan types — silver, gold and platinum — will see smaller, but still substantial, increases. Premiums for cheaper plans will increase at a faster rate because their deductibles will likely decrease to meet ACA regulations starting in 2016.”

After the 2017 debacle, the same study envisions more stable premium increases in the next 10 years — but at rates faster than they rose prior to the implementation of ObamaCare. Federal subsidies won’t be able to keep up with the increase, leaving the government a choice between allowing premiums to skyrocket, or re-writing the law again to extend the programs and add billions more to the national dept.

Most Americans remain unaware of all these machinations, all of which are likely to make a law that remains unpopular with 54% of the public even more unappealing. But most of it may be moot in the near future. That’s because the Association of American Medical Colleges has reported the nation will face a shortage of 90,000 doctors by 2025.

Americans fond of insisting health care is a “right” should ponder that bit of unpleasant reality. That and the fact many hospitals and doctors already do not participate in ObamaCare plans, either by their own choice, or the choice of insurance companies forced to narrow networks to remain profitable. The alternative? Simply abandon ObamaCare altogether as UnitedHealth Group, the nation’s largest health insurer, warned it might do after this year.

Stay healthy, America.

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