“We did not wait for this report. Earlier this year, we took the fight – on behalf of the American public – one-on-one to the CEOs of many of the major health insurance companies we already knew stood to take exorbitant bailouts at taxpayer expense. This is even more important now that Congress has found that the Obama White House and the insurance industry are upping the ante,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “When we confronted them, the CEOs of Aetna, Humana , Wellpoint and UnitedHealth all unapologetically said that their companies would take bailout money. Combined with the information exposed by Committee on Oversight and Government Reform report, it appears that the White House is more than happy to do the health insurance industry’s bidding and then some.”
As written, ObamaCare provides numerous means by which insurers can get funding to make up for losses caused by the law’s inherent weaknesses. One such mechanism is known as the “risk corridor.” The risk corridor essentially provided that insurers who made more on the exchanges had to pony-up a portion of its revenue to cover for insurers that found themselves in the red. The White House promised the risk corridor would be budget neutral. But, as ObamaCare started to unravel and the mix of Americans entering the exchanges posed tremendous risk for the insurance industry, the White House took potentially unconstitutional action by altering the risk corridor provisions to the benefit of insurers at the expense of the taxpayers.
The Committee report exposes just how closely President Obama’s Senior Advisor Valerie Jarrett worked with health insurance leaders – including executives and lobbyists from Humana, Aetna, Wellpoint, CareFirst, Health Net, Inc, Kaiser Permanente and many others – to increase this bailout:
Insurance companies and their chief trade group warned that a budget neutral Risk Corridor program would lead to large premium increases for exchange plans in 2015. Essentially, insurance companies presented the Administration with a choice: face significantly higher premium increases in 2015 for exchange plans or make taxpayers bail out insurance companies.
Documents show that Ms. Jarrett took the warnings of the insurance companies very seriously and indicated that the Administration had given insurers 80 percent of what they sought. Insurers were not satisfied with the Administration’s first change and lobbied for additional protection. In May 2014, the Administration delivered to insurers, modifying the risk corridor payment formula to increase the size of the bailout insurers could expect to receive.
“Congress has not appropriated the funds necessary to fuel this potentially unconstitutional bailout,” said Danhof. “Jarrett is on untenable legal ground when she claims authority to funnel American tax dollars to her friends in the insurance industry. Since congressional power is muted by difficulty in obtaining standing to sue the Administration, the National Center attacked the other half of this symbiotic equation – the health insurance executives that teamed up with the Obama White House to essentially rob taxpayers blind.”
“When National Center representatives confronted health insurance CEOs earlier this year, we did not expect them to immediately see the light and pledge to reject the bailout, but we had two primary reasons to ask anyway. First, we put the companies on the record as publicly stating they would willingly accept a taxpayer bailout. Secondly, the risk corridor provision are supposed to sunset at the end of 2016 – meaning so to should the bailout of the insurance industry – and we are working to ensure that remains so.”
If ObamaCare was everything the President and his team promised, perhaps the concern about perpetual bailouts would be unfounded. But that fairy tale died long ago,” added Danhof. “As this episode with the risk corridor provisions show, the White House seems more than willing to accede to health insurer demands. So, if the industry requests more changes to the law, perhaps even a total cancellation of the risk corridor sunset provision, evidence shows they would likely get their wish. And considering that the risk corridor may cost taxpayers $1 billion or more this year alone, pressure must be applied to corporations that profit from this regime.
“Only when the public outcry and reputational risk to these specific companies starts to outweigh the taxpayer bounty, will they likely retreat from these bailouts,” noted Danhof. “The National Center’s Free Enterprise Project will continue to hold their feet to the fire and look out for the interests of the American people.”
The National Center’s Free Enterprise Project is the nation’s preeminent free-market corporate activist group. In 2013, Free Enterprise Project representatives participated in 33 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, media bias, gun rights and many more important public policy issues. This year, the National Center has participated in 50 shareholder meetings scoring many major victories for liberty and the free market.