A post by Ed Lasky over at the American Thinker is making its way around the internet. Lasky suggests a little known bill introduced by Senator Rubio may have killed Obamacare. Naturally, we had to dig in.
Rubio first introduced similar legislation in 2013. Lumped into the 2014 Omnibus bill, the act passed. Because it was globbed into an appropriations bill, it has an expiration date.
The Obamacare Taxpayer Bailout Prevention Act was re-introduced by Rubio in January, the first piece of legislation he introduced in 2015, with companion legislation introduced by Rep. Andy Harris of Maryland.
The current version would eliminate tax-payer funded bailouts completely.
The Obamacare Taxpayer Bailout Prevention Act’s premise is simple — amend the Patient Protection and Affordable Care Act by striking out section 1342.
Sen. Rubio’s office explained in January:
The bill would repeal section 1342 of ObamaCare, which establishes a risk corridor program to distribute money from exchange plans that earned profits to exchange plans that suffered losses. However, the risk corridor program was not designed to be budget neutral, and section 1342 of ObamaCare puts the American taxpayer at risk of a taxpayer bailout if insurers systematically lose money on exchange plans. By repealing Section 1342, the legislation would force the administration to come back to Congress to request appropriations to cover any losses in the program.
…“Under December’s omnibus spending bill, taxpayers are protected from bailing out insurance companies until September 30, but now Congress has the opportunity to take the possibility of a bailout off the table for good,” added Rubio. “By passing this bill, Congress will ensure that no bailout will occur, in 2016 or ever.”
Laskey pointed to a 2013 article written by Joshua Green which explained why Rubio’s legislation could be deadly to Obamacare:
When the law was written, the winners and losers were expected to balance out, making the risk corridors budget-neutral. But if too many insurers lose money, the government may need to step in. While the ACA’s risk corridors are meant to transfer money from winners to losers, the text of the law (it’s Section 1342, for those following at home) makes clear that the government will pay insurers whose costs end up being significantly higher than anticipated. This is what Rubio is seizing on in his new bill—he’s calling it a “bailout” and trying to stop it.
There’s definitely some validity to the scenario Rubio is warning about, although no one can yet say whether it will happen—or, if it does, what the cost might be to taxpayers. Obama’s decision to allow people in the individual market to keep their plans certainly raises the likelihood. A Nov. 14 letter to Congress from the American Academy of Actuaries warned that if “lower-cost individuals retain their prior coverage, and higher-cost people move to new coverage, the medical costs for those purchasing new insurance would be higher than expected.” This would create a set of conditions “more likely to trigger risk corridor payments.”
If Rubio were truly motivated by concern that taxpayers might end up footing a “bailout,” there’s an easy solution: Write a bill stipulating that risk corridors must be budget-neutral. Presto, problem solved. But Rubio’s bill is far more sweeping than that—it eliminates risk corridors altogether by striking Section 1342 from the law. This is a clue that his real motivation isn’t to eliminate the possibility of a payout but to eliminate the Affordable Care Act altogether.
In October, the Obama Administration confirmed Senator Rubio’s fight against taxpayer-funded bailouts of health insurance companies under ObamaCare succeeded in saving taxpayers over $2.5 billion this past year:
“American taxpayers have prevailed for now over ObamaCare’s crony capitalist bailout program. Taxpayers should never have to bail out health insurance companies that lose money under ObamaCare, and now we need to take that option off the table for good by passing my legislation to repeal the risk corridor provision in ObamaCare once and for all.
“The risk corridor provision was passed within ObamCare under the broken promises of lower health insurance premiums and Americans being able to keep their health insurance plans. ObamaCare is a massively flawed law with a real impact that has destroyed health insurance in America, and it needs to be repealed and replaced.”
Insurers requested $2.9 billion in bailouts and only received $362 million, saving taxpayers $2.5 billion and dealing a solid jab to Obamacare.
Politico Pro explained in October:
Insurers are criticizing today’s announcement by the Obama administration that they’ll receive just $362 million out of $2.9 billion in requested risk corridors payments for 2014… The health law requires that insurers will eventually receive their requested payments. But it’s unclear where the funds will come from to fully pay for it. A budget deal reached last year requires the program to be budget neutral. The risk corridor program was designed to protect insurers entering the Obamacare exchanges.
The bill has the endorsements of just about every grassroots organization on the right including the American Conservative Union, Americans for Prosperity, Americans for Tax Reform, Campaign for Liberty, Center for Freedom and Prosperity, Council for Citizens Against Government Waste, Club for Growth, Freedom Works, Heritage Action, HSA Coalition, National Taxpayers Union, Tea Party Express and the 2017 Project.
Rubio’s risk corridor bill might not be full repeal of the ACA (which is highly implausible at this point), but it’s one of the best solutions on the table. Even better? We know it works.
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Comments
Smart, Sen. Rubio. Very, very smart!
Heh…!!!
Nothing says ‘Democratic Bill’ like a company’s ability to use any amount of taxpayer dollars it wants to cover its losses. (Said losses including campaign money sent to the same Dems who voted for it)
The insurance companies were doing just fine without ObamaCare. The risk corridors were the only way they would participate in the exchanges, because they foresaw (as did most Republicans and many others) just what happened: sick people disproportionately signed up while healthy people bought cheaper policies and the young “invincibles” refused to buy the high-priced plans Obama counted on to balance things out.
They had to have the guarantee against the losses, or they could not participate. Corporate officers have a legal obligation to protect stockholders’ investment and maximize their returns.
Give the Republican party time… they’ve figure out a way to roll over, show their belly to Obama, piddle the rug, and give up on this like they have on everything else.
So the bill is not currently law and Reid will obstruct and Obama will veto.
Reid? Not if McConnell can stop it first.
Not if Mitch can stop it first: “ouch”.
When did it become received wisdom that O’Care was too deeply entrenched to repeal? And here I thought the GOP had promised us that if we elected enough Repubs the deal was done…
The deal was done. It just wasn’t the deal we were promised.
Obamacare is alive and kicking so long as the individual mandate remains.
Also, I have no confidence that the GOP Congress won’t simply provide whatever funds Obama asks for to support this program.
… so long as the individual mandate remains and affordable options appropriate to our own needs are essentially illegal.
Is the individual mandate real, or a real threat? John Roberts notwithstanding, between the many exemptions allowed, which the IRS may or may not follow up on to confirm eligibility, and the seemingly limited ways the government can collect, is anybody that chooses to not have health insurance actually paying the penalty, er, the Shared Responsibility Payment? Has anyone seen any numbers on how many affected taxpayers actually pay, or how many avoid this penalty via exemption or adjusting their withholding so they are not due a tax refund (if, in fact, that may be the only effective way the government could collect the penalty, I’m not sure)?
IRS can only collect the penalties assessed by deducting from a refund. Those who don’t get a refund are immune from enforcement under the law as written, and the amount of refund is the effective limit of the penalty.
There is no penalty or mandate; there is only a relatively low tax which you can avoid by buying insurance. And since it is a tax it can’t be punitive, and must always remain low enough to be an affordable and realistic alternative to buying insurance. The moment it becomes so expensive that it effectively forces people to buy insurance in order to avoid it, it becomes an unconstitutional penalty and thus completely void.
I had thought the risk corridor was designed to be budget neutral. That’s what I think they told us.
Wait a second:
https://sites.google.com/site/healthreformnavigator/ppaca-sec-1342
Yes, it does provide for the federal government to make up some of the deficit. I think I remember that. But insurance companies still could wind up losing money.
It’s only for 3 years anyway. The last one is calendar year 2016. For 2017, insurance companies are on their own.
The theory was, I guess, that by that time – policies for the year 2017 – they’d get the pricing right.
Before that, they get back 50% of their losses if the total amount of claims is 103 percent but not more than 108 percent of the target amount, and 80% of the amount of claims that exceed 108%.
(For the first 3% over anticipated claims they are supposed to get the money from other companies, but not enough companies made money, so that part isn’t working.)
The reimbursement rate increases from 50% to 80% when you get to 108% of anticipated claims because I guess they figured 2.5% of claims is enough punishment to get the companies to get their pricing right.
The problem is, no price will work, except a “death spiral” price with the only people buying insurance on the exchanges being those who get subsidies – except there is a problem of somebody’s income turns out to be higher than anticipated.
There’s also a problem if someone turns out to have made too much money for Medicaid.
The Obama Administation is projecting, I think, that a greater percentage of policies will be biught by healthy or young people, when in reality, it should be less.
This can only go on so long, and the whole sharing-of-risk program with a topoff by government was supposed to end anyway after calendar year 2016.
After Obama, the deluge. Rubio tried to make the deluge come sooner.
Huge insurers like UHC are taking notice.
This is a hill that the GOP should fight on. Jeez. Why aren’t they taking the wrecking ball to this piece of trash?
You are essentially correct. The authors of the plan knew there might be some losses the government would have to cover in the first three years, but they expected the difference between losses covered and taxes collected on profitable plans would be small. They seemed to believe it a zero-sum game, and if one policy lost money, others would surely profit by that amount. It was nonsense of course, but that is the foundation of most leftist policies.
The point here is that Obamacare is financially insolvent, not that many people do not have some sort of insurance through Obamacare, because they do. You can cry all you want about how many people have insurance.
The progam itself is bankrupt and the tougher penalties for not having insurance probably won’t make it solvent.
Again, remember that the tax-that-is-waived-if-you-have-insurance isn’t and can’t be a penalty, and that means it can’t get so tough that it effectively forces people to buy insurance. It has to remain affordable, and the choice of paying the tax rather than buying insurance must remain realistic for substantial numbers of people, or it crosses the line into an unconstitutional mandate and disappears.
Kimberly sweetheart, I’m confused. I read your article and read Lasky’s article, and I still don’t know if Section 1342 has been repealed, or if it was repealed and now is back. If the latter and a new bill is being introduced to re-delete section 1342, certainly Obama isn’t going to sign it. I don’t mean to be critical, but I’d like to understand what the current status is.
It’s been temporarily blocked, but that block is due to expire. Rubio’s new bill will repeal the section completely and permanently.
It’ll never happen. The GOPe will find some way to surrender to the Dems.
So what if the constitution requires an appropriation to spend money out of the treasury. Appropriations, schmopriations. This president will tell the treasury to write the check regardless. “Go ahead and sue me Rubio, my judges will throw it out as a non-justicable “politcal question.”
The Executive has broad discretion in spending appropriated monies within a department. Shifting money between programs has gone on since Roosevelt at least, but it was generally not significant amounts. We’ve never before had a President so determined to thwart the will of the Congress and the people.
Congress can control money more particularly by specifying how some funds must be spent within an appropriation, of course. It’s called “earmarking.” Unfortunately, because the process had been abused to insert earmarks secretly after committee hearings ended or in House-Senate Conference Committees to reconcile differences in versions, there was an overreaction by the public and the practice had to be severely curtailed. The result was to give the President more discretion at the very time we had Obama.
This sounds like a convoluted means of selling Rubio. No sale. Obamacare is dying of its own weight. Cruz will outright get rid of it. Will Rubio? Just vote Cruz.
I’m budget-neutral. I have to balance out my risk corridor every day and do it all without bailouts, congressional mandates and presidential fiats.
“Insurers are criticizing today’s announcement by the Obama administration that they’ll receive just $362 million.”
Oh, boo hoo.
You Insurers. “You can keep your” bailout (hahahahahahahahaha).
“You can keep your bailout”, foolish crony capitalist.
Heh, I’m stealing that one!
Rubio boosting… Is my takeaway on this post.
He threw in with the Establishment after his anti-establishment senate campaign.
Like Rep Mc Sally, if you don’t dance with the ones that brought you, you are politically marked for life.
Two-Timers in high office are wounded animals and fair game.
https://www.youtube.com/watch?v=qqXi8WmQ_WM
this song is hilarious. It pisses off feminists so much…
Sorry, I don’t believe it. For one thing, it’s not law yet. And POTUS Dinglebarry will veto it first thing. We’ll have to wait until there is a Republican or Libertarian in the Presidental seat.
Even if it were true, I’m still not voting for him.
IF Rubio has killed Obamacare I’ll give him a polite nod and a brief thank-you. Or maybe a brief nod and a polite thank-you.
I still won’t vote for him.
Trump wants national single-payer health care, Rubio wants to deal a death-blow to Obamacare. It’s interesting to see how the besotted Trumpalos deal with this, especially the ones who used to pretend to be small-government Tea Party supporters.
Maybe like intelligent and realistic people they’ve weighed the various assets and liabilities and found Trump coming out better than others?
I see all these cutely derisive words to describe people who support Trump. There must also be a term for those who can’t stop bringing him into the conversation. How about “Trumpophobe”?
“Trumpophobe”. That’s a term a liberal would think of. Please do better. I know you’re not in that camp, but the “phobe” words are getting old and the term was coined by the opposition.
He’s in the conversation because he’s running for President, Zippy. Presumably he knew that would draw scrutiny and criticism. Some of his fans seem not to care about his record or grandiose impossible promises. Like their celebrity hero, they enjoy dishing it out but when it comes time to take it, they squeal like little children on the playground.
The GOPe evidently has supporters here. Interesting that they never identify themselves.
Go to a liberal blog and listen to the constant echo of voices saying the same thing over and over. You won’t see the give and take you see on conservative blogs. I am glad to be part of a blog where people actually think for themselves, can not only express their opinion, but can have different opinions. I think that’s healthy…not damning as you imply. I frankly think your statement is a bit off mark, because most people here are very open about their allegiance.
Take this lying Amnesty shill and shove him, good hair, forked silver tongue, and sparkly teeth, where the Sun refuses to shine.
To answer the question in the headline, “no”.
So why write the headline that way?