Insurer Bailouts Who’s Paying? You Are, Unfortunately Healthshare

Insurer Bailouts ­ Who’s Paying? You Are, Unfortunately

Special provisions in the Affordable Care Act (ACA) allow insurance companies to recoup the losses associated with selling ACA-compliant policies, and the money comes from taxpayers like you and me.

insurer­bailoutsLast month Congress rejected a request from the Obama administration to fund a $2.5 billion dollar promise ­ it made to insurance companies as a provision of the ACA. One of the key pieces of this mammoth piece of legislation requires that the government bailout insurance companies for the losses they incur as a result of selling ACA­compliant health insurance policies. Many people see this as a form of corporate welfare, supplementing an industry that’s already rolling in dough, with a market capitalization of $2.5 trillion ­ that’s “trillion” with a “tr”.

But President Obama thinks that despite all of this prosperity, we should bail out those insurance companies that suffered losses selling the policies it mandated they sell. He believes this even though the federal government already gives insurance companies several other massive perks, just for being in business, including:

  • Steering a large amount of customers into the health insurance market by mandating that nearly every American buy health insurance coverage
  • Subsidizing premiums for those who qualify based on income ($18.5 billion in 2014), thus funneling even more potential clients towards health insurance companies
  • Assessing every individual ($63) and every family ($252) enrolled in an employee-sponsored health plan (to the tune of $10 billion) and giving the money to insurance companies who sell Obamacare policies

Despite all of this, most companies managed to lose money selling ACA­compliant policies, and the President believes we should bail them out because of this. The provision of the ACA that requires this is known as “risk corridors”. In design and theory, risk corridors were supposed to be budget neutral, passing the excess profits of those insurers who made money on to those insurers who lost. The problem is that while most insurers made money selling other products, they lost money selling ACA products, the reason for these insurer bailouts.

The premium and deductible increases associated with the ACA have resulted in private citizens being stuck with a bigger bill for health insurance than ever before. And now the administration wants the taxpayers to pay even more, bailing out insurance companies that are already profitable. To me, that’s grossly unfair. What do you think?

Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.

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