Rubio to the Rescue: His Plan to Stop Obamacare's Big Insurance Bailouts
Obamacare has been a disaster from the very beginning. From new taxes and higher premiums to the lies of “you can keep your plan”, it has been nothing but bad news. And when it rains, it pours: it has recently been reported that there is a bailout for insurance companies in Obamacare.
There’s hope: Senator Marco Rubio (R-Fla.) recently introduced The Obamacare Bailout Prevention Act, which would get rid of taxpayer-funded bailouts of insurance companies struggling as a result of the ill-conceived law.
When more people file claims than officially projected in the layout of Obamacare, the insurance companies encounter a growing deficit. Our government will bailout these companies for half of their deficit once claims surpass the projected costs by at least 3 percent. If the deficit grows to 8 percent or more, 80 percent of a company’s cost will be reimbursed by the government.
The bailout provision isn’t the only program outlined in Obamacare to help insurers adapt to their new costs, but it is the only provision of all three that relies on federal funds (AKA taxpayer dollars).
Luckily, Senator Rubio is trying to repeal the transitional program. In a hearing with the House Oversight and Government Reform Committee, Senator Rubio declared, “It’s time for the President and Secretary [Kathleen] Sebelius and for Obamacare supporters to level with taxpayers about the fact that their hard-earned tax dollars will soon be needed to bailout the Obamacare exchanges.”
A larger number of older, sicker adults than originally expected have enrolled in Obamacare, making it nearly inevitable that the bailout will cost the government money, and taxpayers will bear the burden.
Adding salt to the wound, insurance companies are now coming forward with dreadful details on their losses. A recent Forbes article outlined the millions needed to bailout just one insurance company:
Humana announced that it expects to tap the three risk adjustment mechanisms in Obamacare for between $250 and $450 million in 2014. This amounts to about 25 percent of the insurer’s expected exchange revenue. This money is needed to offset losses that the insurer will take as a result of slower enrollment in its ObamaCare plans, and a skewed risk pool that weighs more heavily toward older and less healthy members than it originally budgeted.
Furthermore, Obamacare yields a reinsurance pool of $25 million, the funds for which are collected through taxes on employer-sponsored healthcare plans. A reinsurance pool is like government-backed insurance: it’s a pot of gold that you pay into so if companies suffer a deficit, they’ll be covered for their costs. More than half of the money needed to bailout Humana will come from this reinsurance pool, or in other words, directly from taxpayers’ pockets.
Obamacare is clearly a flawed program, and propping up such a program by bailing out insurance companies left and right with federal funds is atrocious. Senator Marco Rubio’s (R-Fla.) plan to repeal the bailout is just another example of Republicans trying to save the taxpayer from the mess Democrats made with Obamacare.