Rubio will introduce bill to prevent insurance company bailout
President Obama's "fix" for those with cancelled policies may make it likely that insurance companies participating in the state exchanges will lose a boatload of money. The pool of healthy people who participate in the exchanges will be much smaller if those with cancelled individual policies are able to remain outside the exchanges. That means that next year, companies will be forced to radically increase insurance premiums - something state insurance boards are not likely to agree to. Hence, the probability that companies will suffer losses if they continue to offer policies on the exchanges.
Obamacare anticipates that possibility by funneling taxpayer dollars to insurance companies if their losses reach a certain level. Republican Senator Marco Rubio is looking to close this loophole and prevent the government from bailing out insurance companies.
Obamacare includes a provision that allows the federal government to funnel taxpayer dollars to insurers that face the prospect of losing too much money under the new health care law, and conservative critics want to repeal it.
Sen. Marco Rubio, R-Fla., said the provision could amount to a bailout of the insurance industry, which stands to lose if the troubled Obamacare exchanges fail to enroll enough people to make the system financially viable. Obamacare enrollment has already been stymied by glitches at the healthcare.gov sign-up site and it could be dampened again under an administrative fix President Obama proposed this week to resolve problems with millions of cancelled policies.
Rubio spokesman Alex Conant said the Tea Party-aligned senator and potential 2016 presidential candidate is concerned that the fix Obama proposed would increase the likelihood that insurance companies would need a federal bailout. And the existing law would effectively give Obama a blank check to deal with it, he said.
"We need to protect taxpayers from having to bail out anyone as a consequence of Obamacare," Conant said in an email exchange with the Washington Examiner. "Rubio's bill will fully repeal the 'risk corridor' provision in Obamacare, preventing a bailout."
Rubio's office was circulating the bill, first reported by Politico, to other senators on Friday.
"I expect we'll introduce [it] as soon as possible next week," Conant said.
The bailout provision was designed to prevent a "death spiral" by encouraging insurance companies to keep premiums low and stick with the exchanges if things go south. The way things are looking now, this "risk corridor" provision will almost certainly be activated next year due to the probability that they won't have near enough of a balance between healthy and sick people buying policies on the exchanges.
Insurance companies signed on to Obamacare because the prospect of the feds funneling a trillion dollars in new business their way seemed just too tempting to resist. They don't need a bailout on top of that.