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Spending deal blocks the Obama administration from using taxpayer funds to bail out health insurers

12/10/2014

There are plenty of provisions in the newly released $1.014 trillion hybrid spending bill, dubbed the "CROmnibus," that are unwise, wasteful, and bad public policy. There are, however, some policy victories tucked away in the more than 1,600-page document, among them a provision that blocks the Centers for Medicare and Medicaid Services from using taxpayer funds to bailout health insurance companies that participate in ObamaCare.

The "risk corridors" program provides funding for health insurance companies in the event that they incur losses on health plans through the ObamaCare exchanges. Insurers that make money on health plans pay into the program and those fees redistributed to those that pay out more than expect, presumably to cover the costs of high-risk enrollees. The provision is one of three in ObamaCare that are meant to stabilize premiums as insurers transition into the law.

Though the Congressional Budget Office originally scored this provision as budget-neutral because it was to be funded solely by payments from insurers, the Obama administration, anticipating that insurers would experience losses, expanded the program to provide a taxpayer-funded bailout of insurers. In July, the House Oversight and Government Reform Committee estimated that this bailout would cost taxpayers at least $775 million in 2014 alone.

The CROmnibus, in Section 227, prohibits the Centers for Medicare and Medicaid Services from transferring funds to bail out insurers if the "risk corridors" program runs a shortfall:

SEC. 227. None of the funds made available by this Act from the Federal Hospital Insurance Trust Fund or the Federal Supplemental Medical Insurance Trust Fund, or transferred from other accounts funded by this Act to the ‘‘Centers for Medicare and Medicaid Services—Program Management’’ account, may be used for payments under section 1342(b)(1) of Public Law 111–148 (relating to risk corridors).

There was some concern that Republican negotiators would, at the behest of crony insurers that supported ObamaCare, slip in language to authorize the use of taxpayer dollars to cover the shortfall in the program, so this particular provision is a small victory, one made possible by action taken by thousands of Americans who are tired of bailouts and handouts to politically-connected industries.

1 comments
CarlaF's picture
CarlaF
12/11/2014

The Obama administration, knowing in advance the ACA would result in losses for the insurance companies, fully intended the taxpayers to bail out yet another industry. This is one small, but defining, step in the fight to force governmental fiscal responsibility. Consider a two-thirds majority vote to pass any permanent entitlement program and no additional deficit spending for new entitlements created in the future. Dr. Ben Carson's article explores these issues in depth: http://www.washingtontimes.com/news/2014/oct/28/carson-americas-most-inc...

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