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Profits of Doom for Obama’s Insurance Partners

Members of President Obama’s team say they are angry that insurance companies would place “profits ahead of people.”

That’s odd because their own health law dictates just how much profit insurance companies are allowed to make. Insurance companies have to pay out 80 percent of everything they take in, with the 20 percent paying all their costs and leaving little room for profit.

Like selling bananas, if volume is high, margins can be low and still allow for healthy profits. And that was the idea when big insurance companies partnered up with Obama to pass his law. They were going to see margins shrink but would see tens of millions of new customers flood through the doors.

When insurance companies partnered with Obama, it was way back in those halcyon days when ObamaCare was just a second milepost in what the president said was going to be an economic and cultural transformation of America. By now, Americans would probably be downloading ObamaCare apps aboard high-speed trains on their way to enroll in free higher-education classes to train for green jobs.

As it turns out, the president is going to spend the overwhelming majority of his presidency in a health insurance quagmire.

He is currently so deep in the health insurance mire that even consistently obliging sorts in the press and his party feel obliged to point out that when it comes to doing things, he and his team are just not very good. And insurance companies must have by now realized the enormity of their miscalculation.

The technical failures that left skidmarks on the ObamaCare launch have heightened the possibility that America will end up with the free-stuff part of ObamaCare but without a mechanism to pay for it. If the spike in the health-insurance welfare program, Medicaid, and the millions of new unprofitable customers insurers agreed to accept as their part of the deal aren’t offset by low-risk paying customers we are headed for a massive crisis.

The crisis is first hitting the holders of more than 4 million individual insurance policies already cancelled because of new regulations. The fact that the administration was unable in the span of three years to build a functioning Web site so those folks could buy ObamaCare becomes not an embarrassment but a tragedy. An ideological decision about what Democrats thought insurance should cover is now harming people because of staggering technical incompetence in its application.

And for those who can get through the technical wreckage of ObamaCare? The premiums for the government-mandated products on the other side may be simply unaffordable. You can’t have what you wanted. You can’t get through to buy what we mandated. And if you can’t afford it once you do, we’ll fine you for not buying it.

Democrats say this is insurance greed, but the new regulations set government-approved levels of greed. Even that though is going to be too much. So then what? And what about next year when the disruptions hit the employer-based insurance that covers most Americans? If you think the Obama Democrats are angry at “insurance greed” now, wait until those shoes start to drop.

So how did the president’s partners turn into his scapegoats?

Take a look at the Virginia gubernatorial election this week. Much was made of the shady dealings of Terry McAuliffe’s former electric car company: How it sucked up stimulus money and grants. Produced very few cars, but lots of visas for foreign investors.

The Chinese nationals presumably needed to come to the United States to see their cars not get built. Video links from Shanghai just couldn't provide the real sense of an empty factory floor, no doubt. And by the time the Justice Department came along to break up the play, sending Tony Rodham and others scampering, McAuliffe had just left. And as in prior failed ventures, he no doubt left richer. The key in the world of “public-private” partnerships is knowing when to walk away – always leave the bar one drink sooner than you think you should.

The establishment press summoned great gales of indignation about the whole scandal, a small-time Solyndra which brought dishonor to the effort to battle global warming with regulations and subsidies.

Not that the New York Times and Washington Post found this worse than being Ken Cuccinelli who is, after all, a socially conservative Republican. In the Maslovian hierarchy of legacy news outlets, the need to denounce intolerance falls above the need to deplore green scamming. I mean, it was for a good cause, right?

Cuccinelli helped mitigate the damage for McAuliffe by his incomprehensible decision to accept gifts from the boss of a dietary supplement company. It was piffle compared to the massive hauls that Gov. Bob McDonnell took from the CEO, but enough to leave the commonwealth’s chief law enforcement official without a way to distance himself from his disgraced fellow Republican or properly lambaste McAuliffe for a career spent profiting at the intersection of money and power.

And that can be a very lucrative place to hang out, and good for politicians too. And many companies make big bucks by obtaining favored status with politicians. And in the case of ObamaCare and green cars, the dynamic is the same. Politicians create a need through regulations and then offer solutions in the form of subsidies. And when the benefits flow, politicians and their friends are there to scoop them up.

But when things go badly – when they call your subsidized firm a visa mill or the cancellation notices hit mailboxes – the public side of the “public-private” partnership is suddenly on TV blaming your greedy mistakes for the problem.

Chris Stirewalt is digital politics editor for Fox News. Want FOX News First in your inbox every day? Sign up here. To catch Chris live online daily at 11:30 a.m. ET, click here.

Chris Stirewalt joined Fox News Channel (FNC) in July of 2010 and serves as digital politics editor based in Washington, D.C.  Additionally, he authors the daily "Fox News First” political news note and hosts “Power Play,” a feature video series, on FoxNews.com. Stirewalt makes frequent appearances on the network, including "The Kelly File," "Special Report with Bret Baier," and "Fox News Sunday with Chris Wallace.”  He also provides expert political analysis for Fox News coverage of state, congressional and presidential elections.