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Cronyism and Coercion

Jun 30, 2014, Vol. 19, No. 40 • By JEFFREY H. ANDERSON
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After the upset of House majority leader Eric Cantor at the hands of GOP primary voters, many congressional Republicans may be looking for ways to show they are listening to their constituents. One way they can do so is to take renewed aim at Obamacare.


Obamacare’s risk-corridor program is serving as a slush fund for President Obama. He is using that fund to placate his insurance company allies whom he double-crossed. After Obama declared last fall that insurance policies banned by Obamacare would be unbanned by presidential proclamation, insurers were understandably alarmed. Obama’s lawless decree meant that millions of people who already had insurance—and who were likely to be healthier on the whole than those who didn’t—would not be forced into the Obamacare exchanges after all. His decree, therefore, likely made the exchanges’ risk pools even worse.

Insurers registered their concern, and Obama responded by changing the rules on the risk-corridor program so that more money would flow insurers’ way. The Congressional Budget Office estimates that the administration’s rule change was worth $8 billion to insurance companies. The risk corridors that were once projected to generate $8 billion in revenue for the government are now projected to be budget-neutral. But that revenue was being counted on to help offset the cost of Obamacare, which means that (according to CBO scoring) the insurers have now effectively received an $8 billion tax break for which the general taxpayer is on the hook.

Obama now says he won’t dip into the risk-corridor slush fund again. But why should we take his word on that? To prevent taxpayers from being at the mercy of Obama’s whim, Congress would have to pass legislation.

In doing so, the House would clearly be acting on the people’s will. Polling by McLaughlin & Associates, commissioned by the 2017 Project, finds that voters are overwhelmingly opposed to putting taxpayers on the hook for a bailout of health insurers. The poll asked, “If private insurance companies lose money selling health insurance under Obamacare, should taxpayers help cover their losses?” By 81 to 10 percent, respondents said no.

This issue unites Americans. Using taxpayer money to help cover insurers’ losses is overwhelmingly opposed by Republicans (86 to 8 percent), independents (83 to 7 percent), and even Democrats (76 to 14 percent). It’s opposed by those who are white (85 to 7 percent), black (69 to 16 percent), Hispanic (73 to 19 percent), and Asian (80 to 20 percent); by those who are under 40 years of age (78 to 16 percent) and those over 40 years of age (83 to 7 percent); by men (83 to 10 percent) and women (79 to 10 percent). Among seniors—known to be reliable midterm voters—it’s opposed by the tally of 83 to 5 percent.

Nor was this a Republican-heavy poll—38 percent of the respondents were Democrats, while only 31 percent were Republicans.

Democrats will argue that making the risk corridors budget-neutral by law will raise the price of insurance in the Obama-care exchanges. But that would be true only if, in the absence of such legislation, insurers’ losses would have been covered by taxpayers. If the risk corridors were really going to be budget-neutral, as Obama has said and the CBO has echoed (taking his word for it), then such a law wouldn’t raise the price of insurance one bit.

Obama-care’s risk corridors are hardly the only evidence of Big Government’s unholy alliance with Big Insurance, Big Pharma, and Big Hospitals. Further evidence of these cozy relationships is seen in Obamacare’s de facto ban on doctor-owned hospitals. It’s seen in Obamacare’s determined effort to herd doctors out of private practice and into big hospital conglomerates, where they can more easily be controlled. It’s seen in Obamacare’s reinsurance program, which amounts to a tax on most Americans’ health insurance—including employer-provided insurance—in the amount of $63 a head this year, which is used to subsidize insurance in the Obamacare exchanges at other Americans’ expense.

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