Obama, Rubio agree: No bailout for insurers implementing ObamaCare “fix”

posted at 2:41 pm on November 19, 2013 by Ed Morrissey

It’s not too often that we will see Barack Obama and Marco Rubio agreeing on ObamaCare, but that’s the practical outcome of a meeting Obama held to pitch his fix for the broken “you can keep your plan” pledge.  Obama wants insurers to voluntarily continue offering plans on the individual exchanges that his ObamaCare law forces them to end, but he’s not willing to pay money to keep them alive — and to keep the backlash from cancellations from derailing his second term:

President Barack Obama had some bad news for the insurance company CEOs who met him at the White House: His “fix” might cost them.

Obama asked the CEOs to reinstate millions of Americans’ health insurance plans that were cancelled because they fell short of coverage requirements under the law, according to two executives who attended the session Friday.

The president offered the execs some sweeteners, but admitted they won’t necessarily add up to enough to cover the full brunt of added costs that the changes to the insurance market could create. …

Obama will allow insurers to keep offering the cancelled plans to people who had them even if the coverage doesn’t meet Obamacare standards.

But that proposal is voluntary — and the health insurance industry, along with some state insurance commissioners, have said it could destabilize the law’s new health insurance exchanges. They worry that healthier people will stay in these extended plans, leaving sicker people in the exchanges, which would drive up costs.

How popular is this fix?  Here in Minnesota, where the MNSure effort has had its share of difficulties and produced at least 140,000 cancellations, Democratic governor Mark Dayton says no, thank you after insurers balked at implementing it:

Gov. Mark Dayton said Monday that he’s decided against giving Minnesotans who buy insurance on their own the option to keep their existing health plans another year.

Dayton said a letter from the state’s largest insurance companies convinced him that allowing some people that flexibility, as proposed by President Obama last week, would create too much confusion in the marketplace and could lead to ­premium increases.

“Your letter makes clear that ­making the program changes offered by the president last week would be unworkable for your members and would likely cause more expensive health coverage for Minnesotans,” the governor said in response to the letter.

Under fire over the rollout of the federal health law, Obama gave states the discretion to decide whether to allow some individuals to be grand­fathered in on their current policies for a year even if the plans don’t ­comply with the law.

Though Dayton initially applauded Obama’s plan, he weighed the insurers’ arguments and said he would ask Commerce Commissioner Mike Rothman to continue implementing the Affordable Care Act and the state’s health insurance exchange, MNsure, as it is ­presently designed.

John Hinderaker points out that Dayton is hardly a centrist. Dayton’s reversal puts Obama in a real pickle, or perhaps that the White House was never serious about it at all:

So it sounds like Obama’s “fix” is unworkable; no surprise there. Also, there is no more partisan politician in America than Mark Dayton, and if he feels free to reject the Obama administration’s overture and rely instead on input from the insurance industry, one suspects that word has gone out from the administration that the “fix” was only for show, and states should feel free to disregard it.

Rubio responded by blasting Obama’s proposals, which demonstrate the incompetence of the scheme and those implementing it.  He pledged to push Congress to forbid any bailouts for insurers at taxpayer expense just to save Obama’s political hide:

On Nov. 14, the American Academy of Actuaries issued a press release saying that President Obama’s plan to reverse health-insurance cancellations “could lead to negative consequences for consumers, health insurers, and the federal government.” More specifically, the academy said, “Costs to the federal government could increase as higher-than-expected average medical claims are more likely to trigger risk corridor payments.”

It is a damning indictment of ObamaCare’s viability when the president’s only response to people losing their health insurance plans entails putting them on the hook for bailing out insurance companies. The American people are already being directly hurt by ObamaCare’s early failures, and it is unconscionable that they be expected to bail out companies when more failures emerge.

As the people’s representatives, the U.S. Congress should completely eliminate the possibility of a bailout of insurance companies. On Tuesday I am introducing legislation that would eliminate the risk corridor provision, ensuring that no taxpayer-funded bailout of the health insurance industry will ever occur under ObamaCare. If this disaster of a law cannot survive without a bailout rescue valve, it is yet another reason why it should be repealed.

When ObamaCare was debated and passed in 2009 and 2010, none of its proponents, including the president, told the American people that the law granted the federal government the authority to bail out insurance companies at the expense of taxpayers. But now their dirty little secret is out, and it should be wiped out from the law.

Americans are sick and tired of Washington politicians picking winners and losers—and nowhere is this practice more grotesquely evident than taxpayer-funded bailouts, which assault the economic values of our free enterprise system in favor of those who are politically connected and whose lobbyists know the right people to call and levers to pull. ObamaCare is a living monument to this culture, and no one loses more than the average American.

Without this fix, and with Healthcare.gov looking like an increasingly bad bet to be fully functional by the end of the month, Obama is looking at a political checkmate.  It’s not going to take much more before vulnerable Democrats start thinking about a repeal, which would force Obama to issue a rare veto and leave him holding the bag all alone.  Even the most reliably partisan Democratic governors aren’t giving Obama a fig leaf these days.

Update: Some are pointing at this paragraph to say that Obama is in fact proposing a bailout:

The 2010 health law had several tools aimed at helping insurers through some of the fiscal bumps in the new markets. To address the industry concerns about additional costs if they revive the canceled plans, administration officials said last week they would tweak one of those tools — called “risk corridors” — to give them more help. But Obama made clear that the financial support has a limit, according to the two health executives and several other industry sources who were briefed on the meeting.

I’m sure that the insurers don’t see that as a bailout. It’s more of a subsidy, but it still leaves insurers holding most of the cost for Obama’s fix.  As we have seen here in Minnesota, insurers aren’t going for the deal, which tells you just how much of a bailout this looks like from their perspective.  Rubio’s just making sure that the White House doesn’t try to go the whole nine yards on a real bailout.

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obama, Rubio agree …

… on just about everything.

Pork-Chop on November 19, 2013 at 2:45 PM

You have reached Schadenfreude Anonymous, currently all counselors are busy laughing their arses off with callers, please hold…

hillsoftx on November 19, 2013 at 2:46 PM

Conservatives think no insurance bailout means that we got to scrap Obamacare. Obama thinks no insurance bailout means we got to do single payer. A win win.

And Rubio, that’s another story.

anotherJoe on November 19, 2013 at 2:48 PM

Hey, ain’t about time for another HOTGAS Fat Maverick post?

M240H on November 19, 2013 at 2:48 PM

So, violate Federal law (Or else), necessarily expect it to cost you extra money, and, don’t come running to Obama for the difference.

JoeinTX on November 19, 2013 at 2:48 PM

It’s not going to take much more before vulnerable Democrats start thinking about a repeal, which would force Obama to issue a rare veto and leave him holding the bag all alone.

I think the target numbers are -20 on Obama job approval and -25 on ACA approval. If we hit that, then I think you can get repeal through the House and Senate, with possibly enough oomph behind it to even overturn a Presidential veto.

RCP average on Obama job approval as of right now: -14.2.

RCP average on ACA right now: -13.8..

If the GOP takes the Senate in 2014, and expands their House majorities, and we hit these numbers, I think repeal is a virtual lock.

Chris of Rights on November 19, 2013 at 2:50 PM

So lemme guess,
Rs are ready for amnesty ?

burrata on November 19, 2013 at 2:50 PM

What’s the over/under on the date by which a full repeal bill lands on Obama’s desk?

AZCoyote on November 19, 2013 at 2:50 PM

It’s not too often that we will see Barack Obama and Marco Rubio agreeing on ObamaCare

Oh, well, they’ll always have amnesty for illegals to fall back on.

RoadRunner on November 19, 2013 at 2:51 PM

I’ll go on the record as doubting Dingy Harry will bring forward such a bill in the senate. This has been a libtard dream for more than 100 years. He would rather go down with the ship than give it up.

stvnscott on November 19, 2013 at 2:56 PM

I think the target numbers are -20 on Obama job approval and -25 on ACA approval. If we hit that, then I think you can get repeal through the House and Senate, with possibly enough oomph behind it to even overturn a Presidential veto.

RCP average on Obama job approval as of right now: -14.2.

RCP average on ACA right now: -13.8..

If the GOP takes the Senate in 2014, and expands their House majorities, and we hit these numbers, I think repeal is a virtual lock.

Chris of Rights on November 19, 2013 at 2:50 PM

I just don’t believe this is going to happen. Harry Reid is never going to let a repeal through the Senate no matter how bad the numbers get. There’s only so many Senators at risk for losing the job and the Democrats are very unlikely to lose control of the Senate in 2014. Even a bill could get through the Senate, they’re never going to get enough Democrats to vote to repeal it.

The Democrats spent too much time and effort fighting for this. There aren’t enough vulnerable Senate Democrats, given their grip on the blue states, to overturn a veto. This thing is not getting repealed unless we get a conservative president, and conservative control of Congress. The best we will get are various attempts at fixes and tweaks.

Doomberg on November 19, 2013 at 2:56 PM

How about if we just Impeach…

hillsoftx on November 19, 2013 at 3:00 PM

I feel like I should go to the Schadenfreude clinic for treatment, but they’ve all closed due to the law. :(

ConDem on November 19, 2013 at 3:01 PM

Obama wants insurers to voluntarily continue offering plans on the individual exchanges that his ObamaCare law forces them to end, but he’s not willing to pay money to keep them alive — and to keep the backlash from cancellations from derailing his second term:

Bambi won’t use the carrot, but he still has the stick.

PackerBronco on November 19, 2013 at 3:02 PM

D@mn straight there won’t be a bailout!

freedomfirst on November 19, 2013 at 3:07 PM

O/T

This is absolutely hilarious. Was just over to the WaPo website and their front page has NO, NADA, NOTHING, NO MENTION of Obamascare or any of it’s problems or issues. It simply does not exist.

I remember when I was a young child that if I wanted someone to go away I would just close my eyes and, poof they were gone. I think the dumbocrats are all young children.

NOMOBO on November 19, 2013 at 3:07 PM

“I am sorry [name your favorite Democrat], I’m not going to be put into a situation based on the sorry-assed assurances you have given me”

J_Crater on November 19, 2013 at 3:07 PM

What’s the over/under on the date by which a full repeal bill lands on Obama’s desk?

I think Christmas Eve would be a good choice, has a certain symmetry to it. Plus, Christmas gift.

Mayday on November 19, 2013 at 3:08 PM

What Rubio did on Immigration was unconscionable. However, it may have a silver lining. As his prospects dim for the Presidency, it means he may be willing to try to get his reputation cred back by going bulldog on Obama the next few years, which is a win for us.

Ca97 on November 19, 2013 at 3:10 PM

If I was any insurance CEO, I would run away from this as fast as I could. It is illegal and even though Obama said the Fed won’t come after them, and when has that stopped him from changing his mind, it does not stop the State(s) from doing it. As far as I know, the State Insurance Commission has the final say on any kind of insurance sold in that State.

Johnnyreb on November 19, 2013 at 3:11 PM

Laugh and keep laughing because the comedy is good.

Then take a moment to remember that this fool Dog Eater is the Commander in Chief of our armed forces.

After that feel free to bid for the few cots left in my bunker.

Bishop on November 19, 2013 at 3:11 PM

Conservatives think no insurance bailout means that we got to scrap Obamacare. Obama thinks no insurance bailout means we got to do single payer. A win win.

And Rubio, that’s another story.

anotherJoe on November 19, 2013 at 2:48 PM

The issue is that the insurance company are not forced (at least yet) by Obama to delay the cancellation of existing plans… Obamacare is actually dead but has not yet been officially dead…

mnjg on November 19, 2013 at 3:13 PM

obama, Rubio agree …

… on just about everything.

Pork-Chop on November 19, 2013 at 2:45 PM

Yup. I don’t listen to Obama or Rubio at all. They are both proven liars whose word means nothing.

Wigglesworth on November 19, 2013 at 3:15 PM

Pardon me, Sir. Mr. Obama your crap sandwich is ready. Bon appetit.

Mason on November 19, 2013 at 3:15 PM

Bambi won’t use the carrot, but he still has the stick.

PackerBronco on November 19, 2013 at 3:02 PM

No one anymore gives a damn about his stick including those are tasked to use the stick… The welfare queens agitator from Chicago is now a totally paralyzed duck, way worse than a lame duck…

mnjg on November 19, 2013 at 3:17 PM

obama, Rubio agree …

… on just about everything.

Pork-Chop on November 19, 2013 at 2:45 PM

Knocks it over the fence on the first swing.

CurtZHP on November 19, 2013 at 3:19 PM

one suspects that word has gone out from the administration that the “fix” was only for show, and states should feel free to disregard it.

“One” suspects correctly.

Bitter Clinger on November 19, 2013 at 3:20 PM

It’s not going to take much more before vulnerable Democrats start thinking about a repeal, which would force Obama to issue a rare veto and leave him holding the bag all alone.

He’ll always have Nancy & DWS with him.

Bitter Clinger on November 19, 2013 at 3:22 PM

Dayton’s reversal puts Obama in a real pickle, or perhaps that the White House was never serious about it at all

You do realize in saying this that you are implying Obama is trying to make the insurance companies the scapegoats for his incompetence. I am stunned by your rather veiled accusation.

DaveDief on November 19, 2013 at 3:23 PM

Democratic governors aren’t giving Obama a fig leaf these days.

STOP! That’s a terrible mental visual.
It goes along with the ‘Has no clothes’ meme…

bbordwell on November 19, 2013 at 3:26 PM

I’m waiting for big insurance to start suing the pants of of barky.

D-fusit on November 19, 2013 at 3:28 PM

suing the pants of of barky.

There’s another one!

bbordwell on November 19, 2013 at 3:30 PM

The issue is that the insurance company are not forced (at least yet) by Obama to delay the cancellation of existing plans… Obamacare is actually dead but has not yet been officially dead… now morphed into The Walking Dead

mnjg on November 19, 2013 at 3:13 PM

Ogabe on November 19, 2013 at 3:31 PM

does a law saying they WON”T spend money count (legally) as a spending bill thereby needing to be done in the House?
unless they take some other law, strip it and put this in it then bounce it….

dmacleo on November 19, 2013 at 3:38 PM

Obama will allow insurers to keep offering the cancelled plans to people who had them even if the coverage doesn’t meet Obamacare standards.

I remember when we had a legislative branch that made laws.

Cicero43 on November 19, 2013 at 3:39 PM

“fully functional by the end of the month”

Let’s not forget that the end of the month is an arbitrary date pulled out of a hat in order to buy time. I personally look forward to the website being fixed so the underlying economic fantasy on which the law rests can be laid bare for all to see.

stout77 on November 19, 2013 at 3:41 PM

I’ll go on the record as doubting Dingy Harry will bring forward such a bill in the senate. This has been a libtard dream for more than 100 years. He would rather go down with the ship than give it up.

stvnscott on November 19, 2013 at 2:56 PM

IF Obamacare continues on life support until the 2014 elections when employer cancellations to ~50 MILLION Americans go out, chances are it won’t be Dingy Harry’s decision to make…

dominigan on November 19, 2013 at 4:00 PM

Obama says a lot of things. Doesn’t mean he means them. He claims to want to do something. But when Congress talks about giving him the power to do that thing, what does he do? Threatens a veto.

besser tot als rot on November 19, 2013 at 4:01 PM

I don’t know. Marco agrees with Obama (and you Ed) on amnesty.

bw222 on November 19, 2013 at 4:05 PM

Without a bail out, one would think that we could see some big time bankruptcies. However, the health insurance stocks are not reacting much to these goings on. I’m not sure what to make of the effects of all of this.

MJBrutus on November 19, 2013 at 4:10 PM

If I was any insurance CEO, I would run away from this as fast as I could. It is illegal and even though Obama said the Fed won’t come after them, and when has that stopped him from changing his mind, it does not stop the State(s) from doing it. As far as I know, the State Insurance Commission has the final say on any kind of insurance sold in that State.

Johnnyreb on November 19, 2013 at 3:11 PM

Agreed. If you step back and look at it, its positively stunning how ridiculous this rat bastard’s fix really is!

Obama is basically saying that if insurance companies want to break the law for a year, he won’t prosecute them for doing so. It’s the same type of advice that Joe Biden gave shotgun owners not that long ago… just fire a warning shot in the air. And yet we know that the “Joe Biden” defense will not protect you from an “illegal discharge of a firearm” charge.

Obamacare is the law. State insurance commissioners are in charge of enforcing federal and state law requirements on insurance companies and their plans. They aren’t going to violate the law, and risk class action lawsuits just because Obama said it was ok to violate HIS law. That won’t fly in state courts.

No insurance company will risk their company on what Obama says… especially since he’s been proven a liar multiple times over, and has never skipped on expressing his desire to crucify those evil rich insurance companies.

The most risk averse course for the insurers is to obey the law no matter what political misfortune rises out of the see to stomp and breathe radioactive fire all over the Democrat Party.

dominigan on November 19, 2013 at 4:11 PM

I just don’t believe this is going to happen. Harry Reid is never going to let a repeal through the Senate no matter how bad the numbers get. There’s only so many Senators at risk for losing the job and the Democrats are very unlikely to lose control of the Senate in 2014. Even a bill could get through the Senate, they’re never going to get enough Democrats to vote to repeal it.

The Democrats spent too much time and effort fighting for this. There aren’t enough vulnerable Senate Democrats, given their grip on the blue states, to overturn a veto. This thing is not getting repealed unless we get a conservative president, and conservative control of Congress. The best we will get are various attempts at fixes and tweaks.

Doomberg on November 19, 2013 at 2:56 PM

I think you need to put this iceberg in perspective. The 10% we see now are just the 5 million individual plans receiving cancellation notices at the tip of the iceberg. Come fall 2014 we’ll see the FIFTY MILLION cancellations of the employer plans. Imagine our current scenario TIMES TEN! Democrats will be begging Republicans for a full repeal, or they could easily lose the Senate. We’ve already seen one VA governor candidate’s popularity plummet 17 POINTS in ONE MONTH! We haven’t even scratched the surface here. Titanic full ahead! Seriously, I worry about the popcorn supply…

dominigan on November 19, 2013 at 4:19 PM

There is going to be an insurance company bailout. Obama lies he lies all the time. Perhaps the bailout will be called a contingency payment or some such.

Assume the opposite of what King Barky the Liar says and you will be correct 99.8% of the time.

There. Will. Be. A. Bailout.

jukin3 on November 19, 2013 at 4:26 PM

Ed, the only problem with Obama’s insurance bailout (by taxpayers) is that insurers don’t think it’s big enough…yet.

That doesn’t take Obama off the hook for offering it. He has never shown any ability to do simple arithmetic so the numbers are beyond him anyway. A bailout is a bailout, paid by taxpayers to cover Obamacare’s mistakes.

And who knows how big it will eventually be since he changes things every day?

You are being WAY too easy on him here.

Meremortal on November 19, 2013 at 4:35 PM

Ed, the only problem with Obama’s insurance bailout (by taxpayers) is that insurers don’t think it’s big enough…yet.

That doesn’t take Obama off the hook for offering it. He has never shown any ability to do simple arithmetic so the numbers are beyond him anyway. A bailout is a bailout, paid by taxpayers to cover Obamacare’s mistakes.

And who knows how big it will eventually be since he changes things every day?

You are being WAY too easy on him here.

Meremortal on November 19, 2013 at 4:35 PM

He DID say that he liked Math in school until it got hard. That was Grade Three and that damn long division.

slickwillie2001 on November 19, 2013 at 6:02 PM

Ed wrote regarding what Obama is proposing:

I’m sure that the insurers don’t see that as a bailout. It’s more of a subsidy, but it still leaves insurers holding most of the cost for Obama’s fix. As we have seen here in Minnesota, insurers aren’t going for the deal, which tells you just how much of a bailout this looks like from their perspective. Rubio’s just making sure that the White House doesn’t try to go the whole nine yards on a real bailout.

Obama is lying. Again… He knows his “fix” increases the probability that premiums will not cover costs in the near to mid term and the resulting ‘death-spiral’ will demand government action. I.e. giving lots of money to insurance companies.

Call it what you will, but in terms of their balance sheets and keeping the healthcare delivery side funded, insurance companies do see “risk corridors” as worst-case scenario bailouts.

“Risk corridor” monies would flow to insurance companies before the death-spiral starts and continue ongoing as the death-spiral continues – as opposed to a bailout as or just after they file for bankruptcy.

The idea would seem to be to keep insurance companies in the black while they try to raise premiums and decrease costs (payouts for services) fast enough – while hoping that enough healthy people will enter and stay in the system to stop the death-spiral.

My guess is they put “risk corridors” in the law in an attempt to prevent the spread of an ‘ACA-financial-contagion’ to other parts of the insurance/healthcare sectors and so the rest of the economy… Think Lehman Bros.

Obama’s comment may be an indication that he knows he will “have no choice” but to increase the “risk-corridor” payouts very significantly, aka a bailout of the insurance companies by any other name.

To Obama, “risk-corridor” transfers of $1T+ to insurance companies will be spun as testament to his brilliance in crafting the ACA – but bailing out bankrupt insurance companies to the tune of $1T+ could only be seen as failure.

DrDeano on November 19, 2013 at 9:56 PM

State insurance regulators will block ‘the fix’, either overtly or by simply delaying approvals of the brought-back packages by allowing the bureaucratic process to do what it does.

Even Democratic regulators and governors are blocking ‘the fix’. It will not get to the bailout stage.

slickwillie2001 on November 19, 2013 at 10:36 PM