We all knew that Obamacare would be self-destructive. They wouldn’t have the number of enrollees necessary to sustain itself financially, and it would fold.
But the Obamacare builders and proponents weren’t going to let their creation fizzle just like that, just because they didn’t have enough paying enrollees. That’s not how our government operates these days. If every government agency and program had to be able to somehow support itself, we wouldn’t have very many government programs, agencies and departments. Remember, we’re all Keynesians now. Debt is good, and deficits don’t matter. If a program isn’t self-sustaining, the government will always be there to bail it out. And by government, I mean the taxpayers.
So, the fact that Obamacare hasn’t seen the “required” number of enrollees is really no concern to anyone. Apparently, in Connecticut, only about 8% of those who’ve enrolled through their local Obamacare exchanges have paid their premiums. Enrollees have a 90-day grace period where insurance companies are barred from canceling plans that have not been paid for. After that grace period has expired, then unpaid polices can be canceled.
But what about the insurance companies’ losses? Who will cover those? Why, you and I will cover those, of course. Obama volunteered us without telling us. But, that’s OK, right? Why wouldn’t we want to help other people? Isn’t that the Christian thing to do? [I’m joking.]
Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies. It’s even worse that Obamacare is trying to coerce Americans into buying those same insurers’ product (although there are escape routes). It’s almost unbelievable that it will also subsidize those same insurers’ losses.
But that’s exactly what it will do—unless Republicans take action. As Laszewski explains, Obamacare contains a “Reinsurance Program that caps big claim costs for insurers (individual plans only).” He writes that “in 2014, 80% of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example.”
In other words, insurance purchased through Obamacare’s government-run exchanges isn’t even full-fledged private insurance; rather, it’s a sort of private-public hybrid. Private insurance companies pay for costs below $45,000, then taxpayers generously pick up the tab—a tab that their president hasn’t ever bothered to tell them he has opened up on their behalf—for four-fifths of the next $200,000-plus worth of costs. In this way, and so many others, Obamacare takes a major step toward the government monopoly over American medicine (“single payer”) that liberals drool about in their sleep…
But, amazingly, it doesn’t stop there. Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.” So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses.
No wonder insurance companies were so on board with Obamacare. As you can imagine, this set up, where the taxpayers will pick up the tab when costs are over a certain threshold or when enrollees don’t pay, creates a situation of moral hazard. This is only one factor that will contribute to higher healthcare costs. Providers will think, “Well, if the government is going to be paying, we might as well charge a little more…” Insurance companies might respond, “Well, if they’re going to charge a little more, we’ll have to raise our rates. The government will be paying most of it anyway, so perhaps we’ll raise our premiums more than just a little. Besides, the CEO wanted double bonuses this year.” And the costs will continue to rise, taxes will increase, and the quality of healthcare will continue to drop.