ObamaCare’s bailout for health insurance companies

A little-known, but important, provision in the Affordable Care Act, or ACA, is coming under increased scrutiny. The ACA, commonly known as ObamaCare, includes provisions to pay insurers for their financial losses in the ObamaCare exchanges. Known as “risk-corridor payments,” health insurance companies could receive up to 80 percent of the money they lose in...

A little-known, but important, provision in the Affordable Care Act, or ACA, is coming under increased scrutiny. The ACA, commonly known as ObamaCare, includes provisions to pay insurers for their financial losses in the ObamaCare exchanges.

Known as “risk-corridor payments,” health insurance companies could receive up to 80 percent of the money they lose in the ObamaCare health insurance exchanges. Simply put, the same Americans who are having their health insurance policies canceled as a direct result of ObamaCare and who are being forced to pay more for their coverage will likely foot the bill for a potential $47 billion bailout of the insurance industry.

The latest ObamaCare enrollment numbers make the prospect of some level of a bailout all but certain. The “young invincibles” – people ages 18 to 34 – make up just less than one-fourth of the total enrollments. That is far short of the 38 percent target the administration needs to balance out the older and sicker patients in the insurance risk pool. Without a sufficient pool of young invincibles, heavy insurer losses are all but certain.

Some lawmakers in Washington D.C. are now taking steps to reverse this expensive and unfair provision, though this is unlikely to get very far. Legislative proposals, such as the “Obamacare Taxpayer Bailout Prevention Act” and the “No Bailouts for Insurance Industry Act of 2014,” provide an important opportunity to remind taxpayers of the true cost of the misnamed “Affordable Care Act.”