White House Sacks the Treasury in the Name of Corporate Welfare
Friday, one day before the President’s day holiday weekend, the Barack Obama Administration announced that $7.7 billion of taxpayer dollars would be allocated to Affordable Care Act insurers through the law’s reinsurance program.
From the Americans for Tax Reform website:
“For 2015 Obamacare reinsurance, the administration will pay out $6 billion raised from a fee on private health insurance and an additional $1.7 billion that under federal law belongs to the Treasury department.”
Doug Badger of the Galen Institute explains that ACA’s reinsurance program works by silently taxing every individual in America with health insurance. In 2015 and 2016, each individual with insurance is being allegedly taxed a total of $107. According to Badger, the program is designed to “prop up insurers that have agreed to sell Obamacare policies in the individual market.”
While the administration continues to claim that ACA is working, insurers that participate are losing money. But since the reinsurance program exists to cover the losses of the insurers, the administration seems to think keeping corporations happy with the deal is more important than following the law.
With the failure of the system, and with a growing number of consumers referring to alternative methods to have access to care, the administration is having to get creative.
According to the New York Post, not one dollar out of the $7.7 billion being promised to insurers should be taken from the Treasury under ACA law.
From the New York Post:
“The law states a fixed share ‘shall be deposited into the general fund of the Treasury of the United States and may not be used’ to offset insurance companies’ losses.
But the administration gave all of it to the insurance companies last year, and got away with that heist. So now they’re trying it again.”
While the administration projected it would be raising $12 billion for the ACA reinsurance program in 2014, it was $2 billion short. In order to handle the situation, the administration decided to keep the money from the Treasury, using it instead to hand it over to the participating companies.
The administration isn’t a stranger to this type of move. According to the House Energy and Commerce Committee, at least $8.5 billion in taxpayer money has already been illegally funneled to ACA’s corporate welfare programs.
Another initiative designed to shield insurers enshrined in ACA also seeks to secure the investment of insurers. The initiative is known as the Risk Corridor program, and it has also been tied to scandals in the past.
In 2014, insurers requested $2.87 billion in “risk corridors” payments, but the administration only offered 12.6 percent of that value.
The risk corridor program works by redistributing funds from insurers that make money with the Obamacare exchange to insurers that don’t. Not knowing how sick their customers were going to be due to the new healthcare law and its mandates, insurers were not being able to set premiums realistically, making it hard for companies to turn a profit.
Despite falling short on the risk corridor payments, the administration decided to bail out insurers that weren’t making money off the exchanges last year. ACA chief Andy Slavitt, who’s also the former Vice-President for United Health, made the announcement in December of 2015, saying the federal government was going to bail out insurers and offer them the amount they had previously asked. Later, however, Congress blocked the $2.5 billion “risk corridor” payment. The effort was championed by several conservative and libertarian organizations that came together to urge Congress to act.
If nothing is done this time around, taxpayers will have to foot the bill and cover the $7.7 billion the administration has vowed