Congress must soon pass a spending bill to keep the government running through the end of the year and beyond. Such bills are often loaded up with every manner of “rider.” When spending bills are adorned with too many ornaments, Beltway types affectionately refer to them as “Christmas trees.” And those riders are not always bad, but often they are.
There is one rider being talked about currently that Republicans, who hold the majority in both houses of Congress, should reject out of hand. That is the bailout that the Obama White House is desperate to give to insurers who are currently losing billions of dollars in the Obamacare exchanges.
There has been talk — idle talk we are sure — about some kind of deal, by which Republicans agree to bail out the insurers, and in exchange Democrats accept similar special interest riders that Republicans want. Were Republicans to agree to any such thing after years of declaring their interest in repealing Obamacare, they deserve to lose in 2016.
From a purely political perspective, the rescue of Obamacare would be the worst thing Republicans could do. A large percentage of the party’s voters are already in rebellion, after all.
But set the politics aside. Lawmakers are (in theory, anyway) elected to serve the common good. An insurer bailout serves only particular goods. It serves the bottom line of the insurers, and it serves the rapidly deflating egos of the politicians who put together this now-failing health care law.
A bailout will do nothing to fix the long-term structural problems that Obamacare has created in the health insurance market. Therefore, there is no concession that Democrats could reasonably offer that would make it worthwhile to subject millions of Americans to an extra year, two years, or even more years of insurance market dysfunction.
The very need for this bailout, and Democrats’ desire for a deal to make it happen, is an admission that Obamacare is a failure. The risk corridor program was designed to be self-sufficient, with insurers doing better than expected providing modest help to those doing better than expected as they all got used to the new marketplace. That’s because Obamacare’s marketplaces were expected to work. It wasn’t supposed to make up for billions of dollars in losses created by an unsustainable system created by arrogant government planners. For the 2014 benefit year, insurers asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected, or less than 13 percent.
Many critics predicted that Obamacare’s stringent rules about coverage would make insurance painful to buy and even harder to sell at a profit. They warned that the nation’s sickest would sign up in droves, creating a nasty surprise in the form of adverse selection for the very insurers who had supported the law.
The law’s supporters ignored these and all other warnings. That’s the only reason they did not expect 13 of the 23 insurance co-ops to fail. That’s why they did not foresee that even large companies like United Health would lose hundreds of millions of dollars from their participation in the exchanges.
If Republicans can resist the urge to bail out these corporations, they will soon find themselves with a mandate to do what they have long promised; to repeal Obamacare. Whatever other undesirable items go into this year’s spending bill, an insurer bailout should be non-negotiable.
