Robert Laszewski—a prominent consultant to health insurance companies—recently wrote in a remarkably candid blog post that, while Obamacare is almost certain to cause insurance costs to skyrocket even higher than it already has, “insurers won’t be losing a lot of sleep over it.” How can this be? Because insurance companies won’t bear the cost of their own losses—at least not more than about a quarter of them. The other three-quarters will be borne by American taxpayers.
For some reason, President Obama hasn’t talked about this particular feature of his signature legislation. Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies. It’s even worse that Obamacare is trying to coerce Americans into buying those same insurers’ product (although there are escape routes). It’s almost unbelievable that it will also subsidize those same insurers’ losses.
Megan McArdle also writes on this topic, pointing out an interesting anomaly in one case:
As designed, the risk-adjustment mechanism was supposed to be revenue-neutral, and that is how the Congressional Budget Office scored it in their last estimate. But unless the demographics of the exchanges improve pretty quickly, the three temporary risk-adjustment programs are probably set to transfer a large hunk of cash to the insurance companies. That’s what the administration, and the insurers, want to happen; it’s how they are going to keep the insurers on board for 2015. Phil Klein at the Washington Examiner points out that Humana Inc.’s latest filing with the Securities and Exchange Commission warns of a “more adverse than previously expected” mix of customers enrolling through the exchange — but it doesn’t change its earnings forecast for 2014. So either it thinks its losses will be trivial relative to overall earnings or Humana thinks the chances of a bailout from the administration are basically 100 percent.
This is a great example of how corporations—especially Big Corporations—are in no way pro-capitalism but simply pro-their-own-profits. I can’t state strongly enough how much these businesses all deserve to fail and never be bailed out. No matter how much we would temporarily suffer as new insurance companies grew to fill the vacuum, it would be much worse for American society to bail these traitor-corporations out and reward their connivance with the Administration.
The conclusion of the Weekly Standard post is absolutely correct:
All of this puts two things in sharp relief: First, Republicans should attach a no-bailout provision to any debt-ceiling increase—as Charles Krauthammer has suggested—along with a provision delaying Obamacare’s liberty-sapping individual mandate (the delay of which would further undermine Obamacare’s exchanges). Second, Obamacare needs to be comprehensively repealed in January 2017, not modified or “fixed”—and Republicans need to advance a winning alternative to pave the way to that crucial result.
Yes and yes! No bailout for insurance companies and nothing but repeal for the Affordable Care Act.