Well, well, well: it seems that with Obamacare, the insurers got some insurance against loss, too. Just another case of needing to pass the bill to find out what nuggets were hidden within its deep recesses:
If an exchange plan’s performance varies in either direction by more than 3 percent, it either collects a subsidy from federal taxpayers via the Department of Health and Human Services to recoup part (50 to 80 percent) of further losses, or it has to kick back a similar share of the excess profit.
Ideally, the money kicked back by profitable health plans can cover the subsidies for plans that lose. But unlike with the other two R’s, there is no legal requirement that the numbers balance or limit on what can be paid.
So imagine that we do enter a “death spiral” situation in which a large number of exchange health plans lose big and very few turn sizable profits…taxpayers potentially face a multi-billion dollar bailout of health insurers for losses outside the corridor.
Insurers are therefore safe. Politicians who back Obamacare may not be. If insurers’ costs do rise to the level that they require a taxpayer bailout, they will also be announcing massive hikes to their insurance premiums for calendar 2015.
This news may not get the widespread publicity it deserves unless the death spiral begins. But if it does, watch out.
It’s understandable that insurance companies wouldn’t want to go into this untried, untested experiment without this sort of assurance that they wouldn’t lose their shirts. Obama had to give it to them because he needed them aboard once he knew that neither single payer nor a public option could pass. And so this unstable and unholy alliance was born.
[Neo-neocon is a writer with degrees in law and family therapy, who blogs at neo-neocon.]DONATE
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