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

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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David Strom 10:00 AM | June 21, 2024