Marco Rubio started it last fall with his bill to prohibit bailouts for insurance companies in Obamacare. Now the Republicans -- including Michele Bachmann -- are in full-throated yelp about this latest (false) claim that the Affordable Care Act is a "bailout" for insurance companies. What are the facts?
My source is Chris Hayes on MSNBC last night, and here's what I learned. Obamacare has a provision called "risk corridors," which acknowledges that the ACA is creating huge new insurance markets and no one knows exactly how to predict what the costs will be, because costs depend on who signs up. More younger, healthy people = costs go down.
If insurance companies set their rates too low, they would lose money. So to offset that, chances are, they would set rates higher than they might need to be -- and that would be bad for the people and for the success of the plan.
So the ACA includes a provision that tells insurance companies: if your costs exceed a certain amount over the estimate, the government will provide some compensation for you. BUT it also says that if your profits exceed a certain amount, you will pay into the fund. Quite simply, it's re-insurance for a start-up program, not a bailout.
AND it's limited
to three years, after which insurance companies will be able to make
their own predictions and assume all the risk themselves.
So, once again, Michele and Marco have got their knickers in a knot over nothing.
Moveover, the
Medicare Part D Prescription Drug bill, that was signed into law by
Republican President Georgie W. Bush, also had a risk corridors provision, which came closer to a bailout, because (1) it's permanent and (2) it's applies only one-way. It pays insurance companies for excess losses, but it does not require them to contribute excess profits into the fund.
Just like they bleat and bloviate about the food stamps in the farm bill but want to continue the big subsidies to millionaire agribusiness farmers.
AAARRRRGHHHHHH.
Ralph
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