Obama Plans to Circumvent Congress and Bail Out Big Insurers
4th October 2016
The Obama administration is set to use an obscure Treasury Department fund to bail out big insurance companies that were complicit in the president’s illegal effort to save Obamacare. So reports the Washington Post, though not in these terms. It took Christoper Jacobs at the Federalist to explain what’s really going on.
Most readers will recall that in 2013, millions of Americans received notices informing them that their existing health insurance plan would disappear once Obamacare’s major provisions took effect. President Obama’s “if you like your health care plan you can keep your health care plan” mantra was exposed as a lie.
In response, the Centers for Medicare and Medicaid Services (CMS) agreed to ignore the requirements of Obamacare and allow people to keep their prior coverage. Insurers could permit individuals who purchased coverage after the law’s enactment but before October 2013 to keep their plan for a few more months (later extended until December 2017).
But, as Jacob explains, this move, in addition to being unlawful, placed insurers in an untenable financial position. Healthy individuals kept their existing plans and stayed out of the Obamacare risk pool, while sicker individuals signed up for Obamacare in drove. Because insurers hadn’t anticipated the Obama administration’s rule change that produced this phenomenon, they had substantially under-priced their Obamacare products.