Should we bail out the health insurance companies?

A lawsuit involving AIG has brought the monster federal bailouts of 2008 back into some people’s minds. There’s another bailout that may be occurring soon, which most people are unaware of. It comes from the so-called “risk corridors” in the Affordable Care Act (ACA, or “Obamacare”).

It works like this. When a health insurance companies sells a plan and it makes profit above a certain level, they must pay a certain amount to the HHS. On the other hand, if a company sells a plan that has a big enough loss, they are to receive funds from the same pool of money. It’s all explained in detail here.

There is, however, no guarantee that the money paid by profitable plans will be enough to cover the money owed to unprofitable ones. It might be the case that the program runs a profit, with the insurance companies paying in more than they receive. On the other hand, it might be otherwise. There is no theoretical limit to how much the government might be on the hook for.

Will there be enough money or not? Initially the Congressional Budget Office estimated that HHS would collect more than enough money from profitable insurance plans to cover the payments to the unprofitable ones. Supporters of the law crowed about how this proved their opponents wrong. But then President Obama did some of his famous rewriting and made the program more favorable to the insurance companies. Now the CBO only estimates that the risk corridors will be revenue neutral. That change was in April. Then in August came a new Congressional report suggesting that even the revised prediction may have been too generous. This latest report predicts a shortfall of $725 million.

And where would that money come from? Aye, there’s the rub. It seems that in the 2,000 page health care bill, there just wasn’t enough space to cover all of this in detail. The Government Accounting Office (GAO) just announced that there doesn’t seem to be authorization for paying the money. Additional taxes have been proposed. It seems likely that one way or another, the taxpayers will be funding a bailout of the health insurance companies.

It’s kind of a funny thing. Supporters of health care reform seem to be driven by two beliefs: that the health insurance companies are utterly evil, and that the ACA must be defended at all costs. As it happens the ACA does an enormous amount to benefit those evil insurance companies. Guaranteeing them taxpayer-funded bailouts even if they lose money would be one example of that.

Except for, well, basically all of them on this board, who have claimed no such thing about the evil part, and most of whom would like to see the ACA replaced by a single-payer system. So you’re absolutely correct about everything except the parts that you’re wrong about, which is all of them.

More to the point, we know there are problems with the ACA. We’d like to fix them. In any sort of even remotely cooperative environment, Congress would find some lesser-of-three-evils compromise and the problem would go away. In our current world, where nothing except absolute repeal will work for one party, things just stay broken.

Finally, you’re making quite the mountain out of a $750 million dollar molehill in the 2.5 trillion dollar or so federal budget. But please, don’t let reality intrude.

The annual federal budget is about $3-4 trillion. A shortfall of $725 million is less than 0.03% of that and not worth panicking about.

Poisoning the well is not conducive to a useful discussion.

SHould we bail out the insurance companies? No. I’m okay with risk corridors so long as we assume that some companies will get luckier with their pools than others. If most of the insurance companies are losing money, it’s not because their pool is poor compared to others, it’s because they nearly all set their premiums too low. So those premiums must go up.

When I followed the debates in liberal circles the general consensus seemed to be that ACA isn’t the end goal but it can be an important transitional stepping stone to glorious single payer. But I never got that part. If anything it seems to cement the current system in place for the long haul, guaranteeing the insurance companies a captive market.

If liberals actually thought that then they don’t actually know how single payer systems got started. You don’t establish a multi-payer plan and then transition to single payer. Single payer either comes first or not at all, in terms of the experience of other nations, like Canada and Britain, on the single payer side, and Germany and Switzerland on the multi-payer side.

*Glorious *isn’t quite the right word. *Efficient *would be better.

The long haul isn’t forever, for one thing. For another, what you’re not getting is that politics is the art of the possible. Making insurance available at affordable cost to everyone is the goal, and achieving that *now *required accepting the inefficiency of the private insurance companies’ participation in the system. Going straight to the most efficient system all at once was not politically feasible, and pushing for it would have meant no law passed and no actual benefit to anybody. The insurance companies do remain non-value-added and parasitical, but their former value-*subtracting *characteristics are now mostly gone.

What I don’t get is how the corporate special-interest views can be so totally accepted as obvious and necessary that those working for the interests of actual people can be so widely vilified for it - while economic efficiency is still lauded.

So OP isn’t sure whether the health insurance companies will have excessive profits or excessive losses but he’s agin it either way, mainly becuase of the name: Kenyancare.

But he sure knows who to blame:

Wouldn’t ya know? It’s dem liberals’ fault. They could never quite make up their minds whether they hated insurance companies or loved em.

Mods: Please move this thread to the Pit.

No, you should phase them out and transition to single payer.

Some of the SDMB’s conservatives are now on record preferring single-payer to Obamacare. Of course, they couldn’t say this five years ago – the only priority then was making sure Obama failed.

And OP, accounting for money is not a black art. As a nation we will be collectively spending some sum on a combination of
[ul][li] 1. Health-care[/li][li] 2. Health-care inefficiencies such as hundreds of thousands of insurance employees[/li][li] 3. Frauds and other excessive costs like the surgical asistant who billed for $133,000[/li][/ul]
We have to either reduce these costs or pay for them. Items 2 and 3 are as American as apple-pie, so the only option for saving money is to reduce the level of medical care for some Americans.

OP, are the death camps a good idea? Should diseases of people too inferior to pay for healthcare be allowed to fester? What’s your suggestion?

If America decides, as all other developed countries in the world have, that it wants to provide healthcare to all its citizens, funds will have to be found. Choices might include
[ul][li] Forcing healthy young people to pay premiums subsidizing the old and ill. No, no, dat’s teh eevul guvment interfering with our liberty![/li][li] Reducing insurance company profits. Go back to North Korea, you communists![/li][li] Taxes. Obama lied, gosh-darn it! He lied, lied, lied. And don’t forget Benghazi.[/li][li] Sell more Treasury debt to the Chinese. We’ve got to balance the budget, gol-darn it! Lower taxes so we can balance the budget – don’t you liberals even know about the Laffer curve?[/li][/ul]
I think we’ve had more than enough threads on health-care financing. If someone has something new to say, fine. But constructing a Gotcha! – Heads one liberal lied, Tails a different liberal lied? With absolutely zero suggestion for a solution? Really? Mods, just move this to the Pit, please.

Yep, I’m sure that any cite that begins "Despite the president’s assurance that “if you like your health plan, you can keep your health plan,” Obamacare caused significant disruption to people’s coverage as the health insurance exchanges prepared for their first open enrollment. " is going to be dispassionate and unbiased. And I’m sure you’re asking about shortfall out of pure public-spirited concern.
But I’m a bit puzzled by part of your thesis. If Obama rewrote the rules to make the program more favorable to the insurance companies, then wouldn’t they make more profit? And wouldn’t that money be available to make up the shortfall?

You are befuddled by terminology. Here’s what liberals generally think: they think that an effective health care system must be one that is universal, sustainable, regulated, and cost-controlled, and embraced as a basic human right. This engenders a view of health insurance as a common societal necessity rather than a market commodity flogged for profit. Single-payer is the way that many modern systems have achieved this, but fundamentally it has nothing to do with how many payers there are – one, two, or a hundred – as long as they conform to those principles. The health care systems of Germany and Switzerland have far more in common with those of Canada, Britain, France, or any other industrialized country than they do with the dysfunctional quagmire of unregulated profiteering with which the OP is apparently so enamored. I gather that the point of the OP is that the ACA is evil because it has some semblance of semi-rational regulation, and things were ever so much better when they were completely broken.

But … *freedom *!!!

I saw the thread title and said to myself, “I psychically predict that this is a dig at Obama.” I am SO applying for Randi’s million dollar prize, which I will use to bail out the insurance companies!

Should we bail out health insurance companies? IMO no, and they should have never been involved and subsidized as primary players in the ACA.

Will the government bail health insurance companies out? Of course they will, for the same reasons the government will keep supporting all the accounting firms and H&R Block with overly complex tax code, and Comcast and Time Warner with cable monopolies. Congress doesn’t have the stomach to phase out a major industry for the greater good of the USA.

That isn’t totally true, we are also driven by the knowledge that drinking the blood of sacrificed christian babies will compel satan to re-elect a democrat and start the cycle of offering bribes to poor people to vote democrats back into power all over again.

On another note, I don’t see how anyone can look at our system and say we don’t need reform. We cost 2x as much as any other wealthy country and have poorer outcomes. The system is designed to deprive you of care when you need it most. It is a terribly run system and it needs reform. The ACA was just the start.

For the record, the French system is closer to the German than to the British one.
(but indeed in practice, there isn’t much difference with a single-payer, tax-funded, system).

I’m befuddled by wrong terminology.:slight_smile:

What people should just say is “universal health care”. ACA is either a stepping stone to that, or already is that for all intents and purposes depending on what your goal is. Since ACA gives everyone access to insurance who wants it, to me it’s close enough to UHC. But even if you believe UHC means 100% covered, no option to decline coverage, then true, ACA will get us there. But many posters say that we won’t have private insurance companies, and that’s just never going to happen because it hasn’t happened anywhere else.

So it seems to me that we all have a reason to oppose the risk corridors. I just hope that translates into bipartisan Congressional opposition.

Surely there must be some way to privatize the profits while socializing the losses.