A Taxpayer Bailout for ObamaCare
An American public already
reeling from the catastrophic rollout of ObamaCare will more than likely be
hearing an unfamiliar term being bandied about in the new year. “Risk corridor”
refers to a provision in
the law that allows the government to “stabilize” premium costs for insurance
companies during the first three years of the healthcare rollout.
If insurance companies’
“target” costs for providing healthcare have been miscalculated, the Department
of Health and Human Services (HHS) will intercede on their behalf. Syndicated
columnist Charles Krauthammer illuminates the
nature of that intercession. “The insurers understand that they’re going to be
completely ruined,” Krauthammer explains. “And what’s going to happen as a
result of this? There’s only one way out, a huge government bailout of the
insurers is waiting at the end of next year.” More accurately, it will be a taxpayer-funded bailout,
similar to the ones given to the banks and the car companies.
Risk corridors were established to protect insurance companies that
signed up too many sick people, relative to the number of healthy enrollees.
They were part of a system that also included two other concepts known as
“reinsurance” and “risk adjustment.”
The reinsurance part of the equation initially compensated insurance
companies for enrollees whose costs exceed $60,000 per year. For 2014, that
compensation is funded by a $10 billion fund, fed by a $63 tax that has been
levied on all healthcare plans. And while the program collects those taxes even
from large employer-sponsored plans, payouts only help to underwrite the costs
of individual and small-group plans.
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