First order of business for the returning Congress: The No Bailout for Insurance Companies Act of 2014.
Make it one line long: “Sections 1341 and 1342 of the Affordable Care Act are hereby repealed.”
End of bill. End of bailout. End of story.
Why do we need it? On Dec. 18, the chairman of the Council of Economic Advisers was asked what was the administration’s Plan B if, because of adverse selection (enrolling too few young and healthies), the insurance companies face financial difficulty.
Jason Furman wouldn’t bite. “There’s a Plan A,” he replied. Enroll the young.
But of course there’s a Plan B. It’s a government bailout.
Administration officials can’t say it for political reasons. And they don’t have to say it because it’s already in the Affordable Care Act, buried deep.
First, Section 1341, the “reinsurance” fund collected from insurers and self-insuring employers at a nifty $63 a head. This yields about $20 billion over three years to cover losses.
Then there is Section 1342, the “risk corridor” provision that mandates a major taxpayer payout covering up to 80 percent of insurance-company losses.
Never heard of these? That’s the beauty of passing a bill of such monstrous length.
The whole scheme was risky to begin with. Obamacare is already far behind its own enrollment estimates. But things have gotten worse. The administration has been changing the rules repeatedly, raising costs and diminishing revenue.
First, it postponed the employer mandate. Then, it exempted from the individual mandate people whose policies were canceled (by Obamacare). And for those who did join the exchanges, Health and Human Services Secretary Kathleen Sebelius is “strongly encouraging” insurers to — during the “transition” — cover doctors and drugs not included in their clients’ plans.
The insurers were stunned.
Shrinking revenues and rising costs could bring on the “death spiral.”
End result? Insolvency — before which the insurance companies will pull out of Obamacare.
Solution? A huge government bailout. It’s Obamacare’s escape hatch. And it’s already baked into the law.
Which is why the GOP needs to act. Without viable insurance companies doing the work, it falls apart. No bailout, no Obamacare.
Such a bill would be overwhelmingly popular because Americans hate fat-cat bailouts of any kind.
The GOP House should pass it and send it to Harry Reid’s Democratic Senate. Democrats know it could be fatal for Obamacare. The only alternative would be single-payer. And try selling that to the country after the spectacularly incompetent launch of mere semi-nationalization.
Want to be even bolder? Attach the anti-bailout bill to the debt ceiling. That and nothing else. Dare the president to stand up and say: “I’m willing to let the country default in order to preserve a massive bailout for insurance companies.”
In the past, Republicans made unrealistic and unpopular debt-ceiling demands — and lost badly. They learned their lesson. Last year, Republicans presented one simple unassailable debt-ceiling demand — that the Senate pass its first budget in four years.
Who could argue with that? The Senate capitulated within two days.
Who can argue with no bailout? Let the Senate Democrats decide — support the bailout and lose the Senate. Or oppose the bailout and bury Obamacare.