New WH regs provide ObamaCare bailout funding for insurers – while bypassing Congress

posted at 2:41 pm on May 21, 2014 by Ed Morrissey

Their lips say no no no, but their regulations keep saying yes. Despite denials that the Obama administration intends to spend massive amounts of taxpayer dollars to rescue insurers from losses caused by ObamaCare mandates, the LA Times’ Noah Levey reports that new regulations earmark “billions” of dollars in federal funds to indemnify the indemnifiers. The White House plans to use the funds to entice insurers into keeping premium increases low:

The Obama administration has quietly adjusted key provisions of its signature healthcare law to potentially make billions of additional taxpayer dollars available to the insurance industry if companies providing coverage through the Affordable Care Act lose money.

The move was buried in hundreds of pages of new regulations issued late last week. It comes as part of an intensive administration effort to hold down premium increases for next year, a top priority for the White House as the rates will be announced ahead of this fall’s congressional elections.

Administration officials for months have denied charges by opponents that they plan a “bailout” for insurance companies providing coverage under the healthcare law. …

But the change in regulations essentially provides insurers with another backup: If they keep rate increases modest over the next couple of years but lose money, the administration will tap federal funds as needed to cover shortfalls.

In other words, it’s a payoff to perpetrate a fraud. The White House has long argued that their takeover of the health-insurance industry would “bend the cost curve downward,” but instead, premiums have spiked upward dramatically — as have deductibles, a powerful one-two punch to the gut of consumers. That threatens the political prospects of Democrats in the midterms, especially since the next round of premium increases will hit right before the election.

In that context, the new regulations make it clear that the White House intends to use its regulatory authority to provide a false sense of relative affordability, or at least disaster avoidance. It’s also clear that they want to avoid having to ask Congress for the money, which my colleague Conn Carroll thought would be necessary to proceed:

But there is just one hitch: according to a January 2014 Congressional Research Service memo, it would be illegal for Obama to make risk corridor payments to insurance companies without an explicit appropriation from Congress.

This means that Republicans do not need Rubio’s legislation to stop a taxpayer bailout. It is already illegal for Obama to use taxpayer funds to pay insurance companies through the risk corridor program.

Unfortunately, from his war in Libya to his Deferred Action for Childhood Arrivals (DACA) program, Obama has a well established history of flagrantly breaking federal law. And progressive activists are already urging Obama to ignore federal law and illegally bailout the insurance companies through the risk corridor program anyway.

If conservatives want to stop the illegal Obamacare insurance bailout before it starts they must start planning now. The current budget deal expires this September, just two months before Election Day. They must demand appropriations language explicitly banning any payments to insurance companies through the risk corridor program that exceed payments to the program.

If they don’t, then Republicans will have missed another huge opportunity to minimize Obamacare’s damage.

Looks like Rubio’s bill needs to move forward, and fast, if we’re going to avoid another federal-government bailout of the insurance industry, and the cover-up of the true costs of ObamaCare.


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Hey Ed,

Can’t we get some comedian to stage a fake White House briefing to mock Obama?

I’m sure they’d get a ton of hits on youtube.

There is just so much material.

Bigbullets on May 21, 2014 at 2:45 PM

“Laws for common folk”

acyl72 on May 21, 2014 at 2:45 PM

If blocking this bailout isn’t the central platform of the GOP’s midterm strategery, then they’re not serious about doing anything regarding Obamacare.

Doughboy on May 21, 2014 at 2:47 PM

It’s also clear that they want to avoid having to ask Congress for the money, which my colleague Conn Carroll thought would be necessary to proceed:

Didn’t Carroll get the memo where Dear Liar has suspended the Constitution? It’s only a charter of negative liberties, don’t you know.

rbj on May 21, 2014 at 2:47 PM

Gotta love automatic perpetual bail-out funding.

BuckeyeSam on May 21, 2014 at 2:48 PM

Just give it a rest with the constant grievance politics.

libfreeordie on May 15, 2014 at 8:32 AM

Schadenfreude on May 21, 2014 at 2:48 PM

“Laws are for common folk”

acyl72 on May 21, 2014 at 2:48 PM

SSDD with administration

Laws schmlaws

cmsinaz on May 21, 2014 at 2:48 PM

kids are generally off limits

nonpartisan on May 19, 2014 at 10:27 PM

Quit picking on obama.

Schadenfreude on May 21, 2014 at 2:48 PM

If the next R contestant for the presidency doesn’t run on “on day one all obama regs are wiped out with the first pen”, go to Hades now.

Schadenfreude on May 21, 2014 at 2:49 PM

Is that the picture of the devil?

Schadenfreude on May 21, 2014 at 2:50 PM

I hope that all the ins. companies and obama end up in the same place. You harlots and charlatans, the 9th layer is too cold for you.

Rs, who let them, you too!

Schadenfreude on May 21, 2014 at 2:52 PM

More inflation, count on it.

rickv404 on May 21, 2014 at 2:53 PM

With regard to the relative GOP silence on this aspect of Obamacare, I don’t know what to think. If I take a cynical view, I have to conclude that the GOP is quietly pleased with this particular feature of Obamacare. But if I take a realistic view, I have to conclude that the GOP is just too phucking stupid to identify this particular feature and, in turn, too phucking stupid to capitalize on it.

BuckeyeSam on May 21, 2014 at 2:53 PM

He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefits of Trial by Jury:
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.

Rix on May 21, 2014 at 2:54 PM

I’m surprised the earmark to bail out the insurers is only for billions and not trillions. Another Democrat “success.”

JeremiahJohnson on May 21, 2014 at 2:57 PM

Well where is everdiso/lester the molester to tell us that bailouts for the insurance industry is a great thing. And even if it wasn’t it’s the republicans fault.

HumpBot Salvation on May 21, 2014 at 2:58 PM

Well where is everdiso/lester the molester to tell us that bailouts for the insurance industry is a great thing. And even if it wasn’t it’s the republicans fault.

HumpBot Salvation on May 21, 2014 at 2:58 PM

I’m your huckleberry.

Bailouts for the insurance industry is a great thing.

Bigbullets on May 21, 2014 at 3:00 PM

Ace’s excellent podcast (w/ Jay Cost) covered this topic a few weeks ago.

Who do you think are The Insurance Lobby’s biggest recipients?

McConnell, Boehner, Cantor, MccCarthy, Jack Kingston (?) etc.

Don’t hold your breath waiting for legislation from the GOP on this.

aquaviva on May 21, 2014 at 3:02 PM

Didn’t Carroll get the memo where Dear Liar has suspended the Constitution? It’s only a charter of negative liberties, don’t you know.

rbj on May 21, 2014 at 2:47 PM

A fascist leader is acting like a fascist…

This shouldn’t be a surprise given the last 5 1/2 years. The only thing is, he’s not a modern day il Duce, but il Dufus.

Athos on May 21, 2014 at 3:03 PM

I don’t understand. You mean this free healthcare isn’t free?

//////

Bitter Clinger on May 21, 2014 at 3:06 PM

Sue him.

Tater Salad on May 21, 2014 at 3:08 PM

He’s declared himself dictator . . . does anybody care?

rplat on May 21, 2014 at 3:09 PM

GOP House: “We’re mad as hell about this”

faraway on May 21, 2014 at 3:09 PM

The insurance industry? Aren’t they evil? Did I miss the memo?

mankai on May 21, 2014 at 3:09 PM

Go after Obama, not the insurance companies.

Tater Salad on May 21, 2014 at 3:11 PM

People who get obamacare have 90 day grace to pay premium.

If they do not pay the premium, the insurance company’s payment to the doctor will be recouped. (We received our first letters this week from insurance companies.)

So the doctors get screwed.

meMC on May 21, 2014 at 3:11 PM

The insurance industry? Aren’t they evil? Did I miss the memo?

mankai on May 21, 2014 at 3:09 PM

I worry less about the insurance companies, the marketplace will take care of them. Obama doesn’t have to worry about market forces if we allow him to be dictator.

Tater Salad on May 21, 2014 at 3:13 PM

it would be illegal for Obama to make risk corridor payments to insurance companies without an explicit appropriation from Congress.

No problem…Phone/Pen…

PatriotRider on May 21, 2014 at 3:14 PM

@Athos il Dufus. I like it.

rbj on May 21, 2014 at 3:15 PM

He’s declared himself dictator . . . does anybody care?

rplat on May 21, 2014 at 3:09 PM

Obviously not…

PatriotRider on May 21, 2014 at 3:15 PM

Bring Obama up on treason charges now for defying the US Constitution.

sadatoni on May 21, 2014 at 3:16 PM

What I don’t get is that if someone brought up “bailing out big insurance companies”, most Democrats would blame that on Republicans. This should be the Achilles Heel to aim for…

Are you going to vote for the Democrats that bail out big insurance companies?

dominigan on May 21, 2014 at 3:20 PM

OT – several car bombs in Nigeria.

Schadenfreude on May 21, 2014 at 3:20 PM

A business cost that most be taken into consideration is the NEW customer acquisition cost.
Obama’s measurement of success was reaching 8M (questionable) sign ups. This is easy when the law just kicked 7M out of their existing insurance. This is a built in success not new customer acquisition.
The actual cost and or wast of money to get that “NEW” customer is mine boggling. Best guess is only about 1.8M are new customers. The cost of acquisition with this bail out is starting to reach 7-10 Trillion Do$$ars taking in all time and money that has been spent so far and projected through the end of this year. Do the math, that is getting close to $5M/new customer. Most of the cost is pretty well considered to be unconstitutional, illegal and with out the consent and over site of an elected congress.

Is there any one any where out there that can say that this is acceptable.

The elections of 2014 and 2016 will NOT be about jobs, the economy or immigration. It will be about WHO DO YOU BELIEVE. Which “PARTY” exhibits the truth and varsity to be elected.

While I’m on my soap box. Lighten up on the VA. Easily 90% of the VA personnel are their to earn money AND to do there part of helping VETS. This mess could easily be caused by as few as a dozen middle and upper level managers. My felling is that it is the bonus system that is at fault.

Thank-you to anyone who might read this.

jpcpt03 on May 21, 2014 at 3:28 PM

If we only had a media.

Cindy Munford on May 21, 2014 at 3:28 PM

I think that several of the Republican front runners should jointly, privately communicate to the CEOs of these health insurance companies a simple message. The Republicans will get the White House back, and when they do, they will do four things.
1) Any money given out now without proper authorization will be taken back.
2) Price increases will be restricted to a “reasonable” rate, at least partially based on the price increase between the first two years.
3) Future risk corridor funding will be paid for out of the profit fees, and divided among those who need it until the money is gone. That’s it.
4) You can’t leave the exchanges without a 3 year notice.

Basically, try any funny business with the accurate cost and pricing, and we’ll lock you into it and watch you drown in red ink.

dcman98 on May 21, 2014 at 3:29 PM

Rix on May 21, 2014 at 2:54 PM

Declaration 2.0

ITguy on May 21, 2014 at 3:32 PM

Well Congress could stop funding it.

That would require not doing the slush fund spending system that has been going on for the past decade and actually going through and funding agency by agency, and then cutting funds on a piecemeal basis to those pools that fund Obamacare.

That would take this thing known as: leadership.

Specifically, Speaker Boehner.

He has no backbone and seems to prefer the current slush funding system rather than doing as he promised in 2010 and going agency by agency.

To hold the Executive accountable requires Legislative will to do so.

There isn’t any.

And by that Congress makes itself irrelevant and fosters tyranny.

ajacksonian on May 21, 2014 at 3:33 PM

Boehner should make clear that once the election is done insurers can’t count on anything at all, absent an appropriation. He should also make clear that any administration functionary that participates in transferring money to insurance companies without an appropriation will go to jail.

Just make the speech, Boehner. You can’t lose by it, and you have a shot at stopping bureaucrats from participating.

MTF on May 21, 2014 at 3:34 PM

So Let It Be Written

BigGator5 on May 21, 2014 at 3:39 PM

ajacksonian on May 21, 2014 at 3:33 PM

MTF on May 21, 2014 at 3:34 PM

Boehner is little more than just another Obama Republican….

Athos on May 21, 2014 at 3:42 PM

http://www.opensecrets.org/

#1 recipient of Aetna money: Mitch McConnell

#1 recipient of Humana money: Mitch McConnell

#1 recipient of United money: Mitch McConnell

#3 recipient of Blue Cross/Shield money: Mitch McConnell

McConnell might oppose the bailouts publicly, but privately he will make sure they stay in place.

commodore on May 21, 2014 at 3:50 PM

Under Obamanomics this will reduce the deficit too!

rjoco1 on May 21, 2014 at 3:51 PM

This means that Republicans do not need Rubio’s legislation to stop a taxpayer bailout. It is already illegal for Obama to use taxpayer funds to pay insurance companies through the risk corridor program.

Yep, the lifers are all over this.

Oh wait…this isn’t the hill to die on. Optics, you know.

Bishop on May 21, 2014 at 3:57 PM

“I will not sign a bill that adds ONE DIME to the deficit”
B. LIAR Obama

jukin3 on May 21, 2014 at 3:57 PM

Okay, the idea this is collusion is just plain STUPID.

Insurance companies can’t break even. It’s the same thing as losing money to them, especially with an unstable and rapidly changing risk pool. They can’t possibly make it up with better underwriting.

The only thing making up the losses can do is keep the insurers from withdrawing from the exchanges for a year or two.

Premiums will go up as usual, based on claims experience, because they have to.

And so long as the amounts of the net subsidies don’t get out of hand, it will be impossible to prevent Obama from doing it. All that HHS money is just out there, if the President says “use it here,” that’s where it goes.

Y’all were so all-fired anxious to get rid of “earmarks,” remember? Well, the opposite of “earmarked” is “subject to executive discretion.”

Adjoran on May 21, 2014 at 3:59 PM

I wonder what the State Insurance Regulators will have to say about this?

Remember the 10th Amendment? You know… those pesky things called… States?

FUBO.

Key West Reader on May 21, 2014 at 4:12 PM

…it’s only money!

KOOLAID2 on May 21, 2014 at 4:12 PM

Adjoran on May 21, 2014 at 3:59 PM

Point well taken. But please bear in mind that insurers are regulated state-by-state with a Division or Commissioner of Insurance.

These carriers are likely not legally able to take a “bail out” without being shut down or ordered to cease and descist.

/Part of the grand scheme, I suppose.

Key West Reader on May 21, 2014 at 4:21 PM

Boehner is little more than just another Obama Republican….

Athos on May 21, 2014 at 3:42 PM

Just another one of the Elites who deign to be our modern day Aristocracy. They know so much better than the little people of what to do and, really, all they want are titles, rounds of golf and junkets so they can decide what is best for the plebes.

ajacksonian on May 21, 2014 at 4:31 PM

Is that the picture of the devil?

Schadenfreude on May 21, 2014 at 2:50 PM

It looks like he may have spent the weekend with Charlie Crist, so there’s that.

slickwillie2001 on May 21, 2014 at 4:34 PM

We are long past the point where impeachment is the appropriate remedy to deal with this outlaw President. He has no respect for the Constitution or his oath to uphold it. The House should do its job even if it knows that the Senate won’t do its job.

Basilsbest on May 21, 2014 at 4:51 PM

I’m running out of money for him to take and give away to other people.

Lance Corvette on May 21, 2014 at 4:56 PM

I hope a bee flies into his mouth while he’s screaming like that.

avagreen on May 21, 2014 at 6:32 PM

We are long past the point where impeachment is the appropriate remedy to deal with this outlaw President. He has no respect for the Constitution or his oath to uphold it. The House should do its job even if it knows that the Senate won’t do its job.

Basilsbest on May 21, 2014 at 4:51 PM

I wonder how many Dimmerfolk might be willing to go along with this now?

He’s a loser right now. A lame duck loser. Everyone knows it. Sacrificing him might give the Party a chance to hoist someone to the top to take off where he’s so miserably left off. New boss; same old drumbeat.

avagreen on May 21, 2014 at 6:35 PM

Kinder like carrion beetles feeding off the host, and such.

avagreen on May 21, 2014 at 6:40 PM

Speaker Boehner will nip this bailout plan in the bud.

lel2007 on May 21, 2014 at 7:16 PM

This is a very bad thing, and not just for the obvious reason. The insurance industry as a whole has really been unfairly demonized. Please hold your fury for a moment and please bear with me here.

When this was being put together the major insurers were told, (paraphrasing) “you either support us or you’re toast; we will write HHS regs in such a way that non-supporters will be disallowed from the exchanges, and you will be subjected to bad PR campaigns, and regulatory compliance costs the likes of which you could only imagine”. While every state has a “board of insurance” they must still comply with federal law and state law. If you read the entire ACA, you know there are over 216 instances where it stipulates “the Secretary shall… ” essentially make it up as she goes along. And, the ACA funding is fungible and may be altered by the Secretary any time she chooses to do so. The major insurers knew if they didn’t play ball they would be destroyed and they all have share holders to consider. Faced with the proverbial rock-and-hard-place, they chose hard place and hoped for the best. Most lay people don’t know that insurance companies are only allowed to pay claims (medical bills in this case) with premiums collected. No operating costs come out of premiums; that comes from profit realized by the financial services arena most companies have as the other side of business, (whole life, IRAs, annuities, etc. They also (by state law) must have on-hand, at all times, enough cash reserve to pay all exposures. That is the whole point of underwriting and actuarial standards. If they fail to maintain the cash reserve, they could lose their appointment to operate in said state. (This has already happened to some smaller insurers.) With the ACA eliminating underwriting, forcing coverage and services to be provided at no out-of-pocket cost to the insured, capping what can be charged in premium for certain age groups that gobble up the vast majority of health care services, etc.etc., you have what we are seeing today: evidence of risk pools that are severely lopsided, and greatly increased costs to support “free” services to insureds, causing insurers to literally bleed cash. Their only recourse is to raise premiums if they want to survive. Which, of course, O is not going to allow right before election day. The Fascist bastard is going to indemnify the insurers come hell or high water to attempt to shield the dems in the midterms. And of course, he will throw the insurers under the bus, because the LIVs will believe whatever he says, and very few are willing to stand up for the industry. The insurance companies DID NOT want this. Their choices were shit soup or shit sandwich, and well, at least the sandwich has bread to absorb a little of the taste.

Thank you for reading; I apologize for the length of my rant. You may now return to regular programming.

fresh air on May 21, 2014 at 8:58 PM

fresh air on May 21, 2014 at 8:58 PM

Well said.

slickwillie2001 on May 21, 2014 at 11:07 PM

he Fascist bastard is going to indemnify the insurers come hell or high water to attempt to shield the dems in the midterms. And of course, he will throw the insurers under the bus…

fresh air on May 21, 2014 at 8:58 PM

Exactly. Obama and the Dems intend to destroy the health insurance industry (a prerequisite to their real goals)…

We are bringing Western civilization to its knees by selling private insurance plans on a web site where people pick and choose.”

- Kathleen Sebelius, Health and Human Services Secretary

But my journey is part of a larger journey- one shared by all who’ve ever sought to apply the values of their faith to our society. It’s a journey that takes us back to our nation’s founding, when none other than a UCC church inspired the Boston Tea Party and helped bring an Empire to its knees.

- Barack Hussein Obama
June 23, 2007

ITguy on May 22, 2014 at 8:51 AM