If ObamaCare’s Risk Corridor “Bailout” Won’t Cost Much, Let’s Put That in the Law
Apparently, Jonathan Cohn of the New Republic was at the House of Representatives’ Oversight Committee hearing at which I was invited to testify on June 19. Cohn asserts that the hearing “backfired” because the Republican majority reported that health insurers would only claim about one billion dollars from ObamaCare’s risk corridors this year:
In the context of a program with outlays and tax credits of more than $2 trillion over the next ten years, that extra spending is simply not a big deal. (Remember, the risk corridor program expires in 2016.)
Get it? Because ObamaCare is such a huge blowout, a billion dollars is not much money. If ObamaCare cost $20 trillion, or $200 trillion, the estimated risk-corridor payouts would be even more “simply not a big deal”. So, the way to ensure that any individual component of a big-government program is “simply not a big deal” is to make the total as big as possible.
Also, the risk corridors kick in alongside another $25 billion from another program called “reinsurance”. I discuss this in my written testimony, where I point out that the $25 million is an outer limit, according to the legislation. Insurers cannot winkle more money out of the reinsurance fund without amending the law. The risk corridors, on the other hand, are limited only by insurers’ and bureaucrats’ creativity in stretching the definitions of targeted costs versus allowable costs.
Furthermore, although the Congressional Budget Office declared the risk corridors “budget neutral” in April 2014, it had $8 billion surplus as recently as February! The trend line is clearly in the wrong direction. Obviously, if the estimated cost of risk corridors increases by $4 billion every month the CBO updates its estimates, there is something missing from the analysis.
So, there is no point in accusing the majority staff having “backfired” by doing their best to figure out how much risk taxpayers face in ObamaCare’s risk corridors. If Mr. Cohn and ObamaCare’s supporters really want us to stop wasting time on this issue, the solution is obvious: Bipartisan agreement in Congress and the White House to amend the Affordable Care Act to mandate that risk corridors be budget neutral.
Plausible deniability is the reason Rick corridors aren’t limited in law. PPACA proponents in Congress realize there is a good chance the costs will exceed CBO estimates. But they don’t actually care about the cost of ObamaCare to the same extend that opponents do. If it costs future generations more in order to have socialized “Welfare State” health care for all — that’s no big deal. Just look at Denmark, Norway, Germany and Sweden. These are all socialist utopias where middle-income people have a marginal tax rate that exceeds half their income so the government can decide to dole it out in the way it sees fit. The average Swede gets back more than three-quarters of their taxes in services, but they are not at liberty to decide what they pay for.
That’s how supporters see ObamaCare. A costly program that removes discretion because people shouldn’t have the choice about whether to subsidize their fellow man.
My sentiments exactly. The risk corridors are looking a lot like an escape hatch. All I’m asking is that their supporters put their money where their mouth is!
When did a billion dollars of unnecessary spending just become an afterthought?
As a taxpayer, I don’t find it an afterthought at all. But I’m not a liberal willing to give all of my money to the government either.
“…the way to ensure that any individual component of a big-government program is “simply not a big deal” is to make the total as big as possible.”
To lessen the blow of a failure to a government program, might as well have Godzilla-size spending.
It matches our Godzilla-sized debt and our Godzilla-sized government.
Ugh, yes, even a billion dollars is now viewed as chump change…for an administration that has spent more money than all previous administrations combined, raised the debt more than any other, and handed 16 percent of the US GDP to healthcare bureaucrats.
If only an afterthought because it’s other people’s money! The Marxists in our government and media can never understand the simple concept that nobody is going to be as careful with their money as the people who earned it. In their idea of “fairness,” redistribution is more important than efficiency, sadly.
It’s only “fair” that they waste all of OUR money on their flawed policies that are for “the greater good.”
I have a feeling the government thinks its all of their money, and our paychecks are just a small allowance we can keep. Meanwhile, they overspend and keep us in debt up to our eyeballs.
“Cohn asserts that the hearing “backfired” because the Republican majority reported that health insurers would only claim about one billion dollars from ObamaCare’s risk corridors this year:”
I imagine this journalist just couldn’t wait to write this headline. Its only a billion dollars, gosh way to overreact Republicans!
It makes me wonder how much money Mr. Cohn thinks is big enough to pay attention to? All I ask in my post is that Congress put a limit on it.
Maybe the cost will be one billion, or maybe ten billion, or maybe zero. Congress’ duty is to debate and define it, not leave it open ended.