John Q. Public got his pockets picked last weekend by ObamaCare bureaucrats.
In a sneaky and illegal maneuver after close of business Friday, the Obama administration proposed a new rule increasing bailout protection for insurance companies that sell ObamaCare exchange plans. The rule –using taxpayer money, of course -- is designed to protect the companies from losses.
It’s illegal, because no president, including Obama, has the constitutional authority to rewrite the laws. The president’s sworn duty is to “take care that laws are faithfully executed.”
The Affordable Care Act, as written and enacted in 2010, contains a bailout provision, Section 1342. It makes insurers whole for losses they were certain to incur by virtue of offering “affordable” plans.
Such losses were inevitable, because ObamaCare rules make it impossible for an insurance company to offer “affordable” plans and still cover costs. The premiums have to cover a long list of mandatory benefits, as well as $100 billion in taxes that the law imposes on insurers over the decade. Most significantly, the premiums have to cover the cost of caring for seriously ill people for the same price as healthy people.
Every state that tried this community rating scheme (including New York ) has seen premiums soar as the healthy, unwilling to foot the bill, stop buying insurance.
The bailout provision was inserted in the law by design to encourage insurers to set premiums too low. That helps the law, and its Democratic backers, look good. It was deception from the start, and a real effort to make a fatally flawed scheme appear as if it is providing affordable health plans.
The bailout provision went unnoticed until November, 2013, when public outrage over five to six million cancelled plans moved President Obama to make one of his many ad hoc changes to the law.
The law, as written, forced insurers to cancel policies that didn’t comply with ObamaCare ’s one-size-fits-all coverage requirements. But on November 14, the president disregarded his own law and told insurers they could keep selling the non-compliant plans.
The insurers complained that this sudden change would wind up costing them money. Not to worry, said Obama health official Gary Cohen, who pointed to section 1342 and even promised to sweeten the bailout’s rules to “provide additional assistance.”
That’s when members of Congress decided to read Section 1342.
Outraged House Republicans held a bailout hearing, at which Secretary of Health and Human Services Kathleen Sebelius confessed the administration had never tried to estimate what the bailout would cost taxpayers.
So much for the administration’s frequently repeated false claim that the bailout is “revenue neutral.”
Sen. Marco Rubio (R-Fla.) proposed repealing the bailout provision, but that went nowhere.
That is, until Friday, when the administration moved in the opposite direction by lawlessly sweetening the bailout for 2015. The new rules substantially increase permissible profits and the percentages of revenue that insurers can spend on salaries and administration, instead of patient care.
The motive for these new sweeteners is obvious.
President Obama continues to dismantle his own law, hacking off provisions as they become unpopular in order to minimize Democratic losses in the fall elections.
Health reform be damned.
Among the latest ad hoc changes are to let people continue to buy their old, non-compliant plans through 2016, and to virtually eliminate the tax on people who fail to get covered.
Popular with John Q. Public, perhaps, until John finds out he has to prop up the insurers who will lose money because of these changes.
But only through 2016, when the law says the bailouts will end. Conveniently, that’s also when Obama will leave office and insurers will have to face the music.
No wonder Moody’s, a rating agency, lowered its outlook on the insurance industry from stable to negative, blaming the “ongoing unstable and evolving environment” as the president mangles and distorts his own law.
So in 2016, it seems, insurers will get what their due for embracing a scheme that forces the public to buy its product and bail them out to boot. Just desserts.
John Q. Public is the real victim. John is forced to throw good money after bad to prop up the president’s unworkable law.
Friday’s sneaky rule announcement is the latest example.
Betsy McCaughey, Ph.D. is chairman of Reduce Infection Deaths and a senior fellow at the London Center for Policy Research. A former Lt. Governor of New York, she is author of "Beating Obamacare." For more visit www.BetsyMcCaughey.com.