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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