By the end of the week, Congress is expected to pass legislation to fund the government through an omnibus spending bill. In this bill, they must stop Obamacare Chief Andy Slavitt from spending billions in taxpayer dollars bailing out insurance companies through the risk corridor slush fund. A provision preventing this taxpayer bailout is set to expire at the end of the year, and Slavitt has said he will pay out billions in taxpayer funds as soon as he is able to. Congress must not be complicit in this textbook case of corporate welfare.
The Risk Corridor program was designed as one of three programs (together with Obamacare reinsurance and risk adjustment) to hide the true costs of Obamacare health insurance plans by redistributing funds from winners to losers. The risk corridor program is required under current law to be budget neutral, meaning payments from the slush fund to insurers that lost money cannot exceed payments made into the program by insurers that made money.
This provision has already saved taxpayers $2.5 billion after the program took in just $360 million, or 12.6 percent of what insurers requested for 2014. With the risk corridor program set to run for two more years, it is imperative that taxpayers are protected in future years.
The provision requiring Risk Corridor revenue neutrality expires at the end of the year and so if Congress does not renew the provision, Slavitt will be free to immediately send $2.5 billion in corporate welfare payments to Obamacare insurers, with billions more to come over the next two years.
Not only is the program corporate welfare, Slavitt’s interest in a risk corridor bailout is clear crony capitalism.
A short time after CMS announced the worse than expected outcome of the risk corridor program, United Health Insurance – the largest insurer on the exchanges – announced it could not sustain the costs of providing operating on Obamacare .
Slavitt, a former VP of United Health, was quick to issue a statement promising insurers they will be paid the full amount they asked for, even though the funds are not there.
This is not the first time Slavitt has been the subject of conflict of interest charges – but this time taxpayers stand to lose billions of dollars from this crony capitalism.
When Congress passes its omnibus spending bill, it must ensure that taxpayers remain protected against an Obamacare risk corridor bailout.