The judgment fund bailout of Obamacare could happen in October

A Washington Post story published Thursday confirms most of what has been rumored about a plan by the Obama administration to do an end-run around congress and bailout Obamacare insurers:


The Obama administration is maneuvering to pay health insurers billions of dollars the government owes under the Affordable Care Act, through a move that could circumvent Congress and help shore up the president’s signature legislative achievement before he leaves office.

Note that the language here assumes something that is a topic of debate. The Obama administration says it owes insurers this money, but the Congress passed a law saying the money could not be paid from HHS funds specifically to prevent a taxpayer bailout of insurer’s losses.

Justice Department officials have privately told several health plans suing over the unpaid money that they are eager to negotiate a broad settlement, which could end up offering payments to about 175 health plans selling coverage on ACA marketplaces, according to insurance executives and lawyers familiar with the talks.

The plan is to announce a percentage of the amount insurers originally requested in 2014. That percentage would then be offered as a settlement to all the insurers, possibly in the next couple weeks. The Post story also notes the split between the administration’s “upbeat portrayal” of the law and the behind the scenes scramble for money:


In the administration’s waning months, officials are continuing their upbeat portrayal of all aspects of the law. Behind the scenes, they think that making these payments to insurers — $2.5 billion for 2014 and an as-yet-undisclosed sum for 2015 — is crucial to the exchanges’ well-being.

In the end this is about trying to preserve the president’s legacy:

“It’s a legacy item for the White House,” said Dan Mendelson, president of the health consulting firm Avalere and an adviser on the payout effort. “It’s more than just a lawsuit. It’s really about the future . . . and stability of these markets.”

But insurance industry expert Bob Laszewski argues that even if this bailout succeeds, which is far from certain according to a report by the Congressional Research Service, Obamacare will still have the same underlying problems:

Will this prompt a turnaround for the Obamacare insurance exchanges that have been struggling with inadequate enrollment, very poor insurance company operating results and resulting big rate increases and health plan exits?


What these payments would do is to help the health plans restore billions of dollars in lost surplus because of the lack of the promised payments in the first place. In that sense it is good news for the insurers that participated in 2014, and presumably 2015.

But the risk corridor reinsurance program will end at the end of this year by statute. There can’t be such relief in 2017 and years beyond without the Congress and President agreeing to extend the reinsurance program.


Finally, note that the Obama administration has already shorted taxpayers $3 billion according to the Government Accountability Office in another shady effort to shore up the President’s legacy.

Join the conversation as a VIP Member

Trending on HotAir Videos