At the risk of understatement, Obamacare is a mess.
It’s even been bad for some of the special interest groups that backed the legislation. The big insurance companies supported the law, for instance, because they thought it would be good to have the government force people to buy their products.
And these corrupt firms even got a provision in the law promising bailouts from taxpayers if the Obamacare system didn’t work.
Given the miserable track record of the public sector, that was probably a crafty move.
But the companies mistakenly assumed their sleazy pact with Obama, Pelosi, and Reid was permanent. Fortunately, their Faustian bargain appears to be backfiring.
Senator Marco Rubio has led the fight to stop bailouts for the big insurance companies.
Here are some excerpts from his recent column in the Wall Street Journal.
“Six years after being signed into law, ObamaCare is a costly and unsustainable disaster. … ObamaCare is also bringing out corporate America’s worst crony-capitalist impulses. The health-insurance lobby has teamed up with trial lawyers to sue the federal government—through individual lawsuits and a $5 billion class action—for not following through on a sweetheart bailout deal buried in the law. This provision of ObamaCare would have required taxpayers to bail out insurers.”
But in a rare victory for taxpayers, the Florida Senator got the law changed to restrict bailouts.
“My conservative colleagues and I sounded the alarm about the likelihood of a taxpayer-funded bailout of health insurers (and were mocked as Chicken Littles for it). … When it came time to pass a spending bill at the end of 2014, we succeeded in making it the law of the land that the ObamaCare bailout program could not cost taxpayers a single cent—which ended up saving taxpayers $2.5 billion. In December of last year, we came back and repeated the feat. Now I am urging leaders in both the House and Senate to make this a priority and stop the bailout a third time.”
As you might imagine, there’s a counterattack by the corrupt insurance companies that conspired with the White House to impose Obamacare on the nation.
“… the health-insurance companies are suing to try to get their bailout … professional attorneys from the Congressional Research Service … said that the administration’s practice of making other payments to insurers under the ObamaCare reinsurance program ‘would appear to be in conflict with the plain text’ of the law. … Health insurers can hire all the high-paid trial lawyers they want, but they will run into a constitutional buzz saw: America’s founding document grants Congress the power of the purse … Health-insurance companies need to wake up to the reality that this … money they are fighting for, and that the Obama administration is trying to weasel a way to somehow give them, belongs to taxpayers. Taxpayers get to decide—through me and others in Congress—whether to bail them out. And the people have spoken: No, we will not bail out health insurance companies for ObamaCare’s failures.”
Amen to Senator Rubio.
Let’s hope Congress continues to oppose bailouts, and let’s also hope the White House isn’t successful in somehow giving our money to the big insurance companies.
Speaking of which, here’s what Investor’s Business Daily wrote about the bailout controversy.
“Right when you think Washington can’t get any worse, it does. That much was evident at a recent U.S. House of Representatives committee hearing into the Obama administration’s bailout of private health insurance companies. It’s a textbook case of government officials ignoring federal law to put special interests before the interests of American taxpayers and families.”
Here’s how the mess was created … and how the Obama White House chose to respond.
“Thanks to the Affordable Care Act’s labyrinthine mandates, health insurance companies have collectively lost billions of dollars on the exchanges, leading to an increasing number of them limiting their participation in or exiting the exchanges altogether. As a result, many insurers have demanded larger subsidy payments. … responding to insurance industry demands — in November the Obama administration promised to ‘explore other sources of funding’ for payments to insurers. Yet rather than work with Congress, the administration flouted the law entirely — and in this case, that means using tax dollars to bail out insurers left on the exchanges. CMS simply decided to ignore the law.”
Unfortunately, ordinary people don’t have that option.
They simply pay more to get less.
“Meanwhile, Americans rightly wonder who’s looking out for them. Premiums have actually risen faster in the five years after passage of the Affordable Care Act than in the five years before, while deductibles average nearly $3,000 for the most popular exchange plans.”
Isn’t that typical.
Big government makes life worse for the average person while the special interests get special deals.
Speaking of special deals, let’s look at another Obamacare rescue for a privileged group.
Bob Moffit of the Heritage Foundation explains the contortions needed to keep health insurance subsidies flowing to Capitol Hill.
“… one scandal is truly bipartisan: How key administration and congressional officials connived to create, under cover of the Affordable Care Act, also known as Obamacare, special health insurance subsidies for members of Congress.”
Here’s the background.
“Rushing to enact the giant Obamacare bill in March 2010, Congress voted itself out of its own employer-sponsored health insurance coverage—the Federal Employees Health Benefits Program. … But in pulling out of the Federal Employees Health Benefits Program, they also cut themselves off from their employer-based insurance contributions.”
Subjecting themselves and their staff to Obamacare may have been smart politics, if only to avoid the charge of hypocrisy, but that created a different problem.
“Obamacare’s insurance subsidies for ordinary Americans are generous, but capped by income. No one with an annual income over $47,080 gets a subsidy. That’s well below typical Capitol Hill salaries. Members of Congress make $174,000 annually, and many on their staff have impressive, upper-middle-class paychecks. … Realizing what they had done, congressional leaders sought desperately to get fatter taxpayer subsidies in the Obamacare exchange system. … The standard excuse was that, without a special ‘sweetener,’ a Capitol Hill ‘brain drain’ would ensue; the best and brightest would flee to the private sector to get more affordable employment-based coverage.”
Gee, it would have been a shame if the people who have screwed up public policy had to get jobs in the private sector (or, more likely, the parasitic lobbying sector).
But the law oftentimes is not an obstacle when the Obama White House wants something to happen.
“… at a July 31 closed-door meeting with Senate Democrats, President Barack Obama had promised he would ‘fix’ the mess they made of their health coverage. So, on Aug. 7, 2013, just as Congress was getting out of town for the August recess, the Office of Personnel Management ruled that members of Congress and staff enrolled in the exchange program would get Federal Employees Health Benefits Program subsidies, even though they were no longer in the program.”
But how exactly did the White House evade the law?
“… the Office of Personnel Management declared that Congress and staff were eligible to enroll in the Washington, D.C., ‘SHOP’ Exchange, a health insurance exchange reserved for small businesses with fewer than 50 employees. The exchange offers special insurance subsidies to participating small businesses. The problem was, of course, that Congress is not a ‘small business,’ at least under any clinically sane definition of the term, and no section of the Affordable Care Act provided for any congressional exemption from the ban on large employer participation in the SHOP exchanges.”
By the way, as a former staffer on Capitol Hill, I do have some sympathy for the lower-level folks who didn’t create the Obamacare mess and would suddenly be in a position of having to pay all their health costs out of pocket if the law was obeyed.
But that’s not a reason to engage in legal chicanery.
As part of tax and entitlement reform, by all means let’s shift to a system where we address the third-party payer crisis by having most health care expenses directly financed by consumers (reserving insurance for large, unpredictable expenses). That new system should include all people, including politicians and their staff.
Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute. Mitchell is a strong advocate of a flat tax and international tax competition.