Surprise! Obamacare’s crony health insurance company bailout could hit $1 billion in 2014

Remember when the Obamacare “risk corridors” bailout program wasn’t going to cost taxpayers anything? Well, that might not be true — surprise! At a House subcommittee hearing yesterday, Rep. Jim Jordan (R-OH) explained that the Obamacare bailout provision for health insurance companies could cost taxpayers as much as $1 billion in 2014:

An ObamaCare revenue-sharing program amounts to a taxpayer bailout of insurance companies, the chairman of a House Oversight subcommittee said Wednesday, adding the bill could run more than $1 billion just in 2014.

Rep. Jim Jordan (R-Ohio), chairman of the Economic Growth, Job Creation and Regulatory Affairs panel, disputed a previous Congressional Budget Office (CBO) report that the risk corridors would cost the government nothing.
[…]
Based on the committee’s own research of 15 traditional insurers and 23 ObamaCare co-op insurers, Jordan said companies expect to get nearly $730 million from the corridor.

“The information provided by the insurers suggests that the total taxpayer bailout could well exceed $1 billion this year alone,” he said.

The “risk corridors” provision — one of the “three “Rs” of Obamacare — guarantees payments from the federal government to insurers if the risk pool isn’t properly balanced with the young and healthy people who are intended to offset the costs of sick and unhealthy consumers.

Insurers pay into the program, which, in turn, redistributes the money to insurers that have lost money. The program, intended to prevent an insurance death spiral, was expected to be budget-neutral and transitional, in effect for just the first three years of the Obamacare exchanges.

The poorly conceived launch of the exchanges, however, put the original projections in doubt, especially after the White House rolled out its FY 2015 budget, in which President Barack Obama requested $5.5 billion for the bailout.

Congress hasn’t appropriated any money for the bailout. That’s a big problem for the Obama administration, which can’t legally make the distributive payments to insurers if the program runs dry.


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