The Obamacare reinsurance plan arbitrarily became a gift to insurance companies that was stolen from those who were required to buy insurance.
Obamacare seemed risky and the system had a mechanism for inducing insurance companies to cooperate. That mechanism ended up simply giving insurance companies money. As the Federalist reports:
The Transitional Reinsurance Program is one of three mechanisms in Obamacare created to protect insurance companies from the risks associated with entering into the new marketplaces. This temporary program was designed to help insurers recoup large claims.
The goal was for these funds to pay 80 percent of a high claimant in excess of $45,000 up to $250,000.
The reinsurance program was funded by a “fee” (more or less like a sales tax) that every insured person had to pay. There were only 16.3 million people in the risk pool that qualified for this program, but more than 138 million people paid into it.
The government decided that, instead of paying only eighty percent of the amount of each claim, they would pay 100 percent of each claim. They simply gave money to private businesses that they got from people who were required to buy insurance.
The Federalist story summarizes as follows:
- Over 138 million people paid a total of $8.7 billion to a reinsurance fund.
- Only 16.3 million people were in the risk pool that this money was set aside to fund claims.
- The money in this fund was supposed to reimburse insurance companies 80 percent of the large claims.
- Instead the government paid the insurance companies 100 percent of the large claims.
- The total paid out was $7.9 billion.
So the government collected more money from you than they needed, gave more money to insurance companies than the original agreement, and kept $800 million of your money for insurance companies in the future. Yet for 91 percent of those who paid in, it didn’t help whatsoever.
Once again, the government is simply forcing money away from consumers into the pockets of big business.