Dear Congress: Stop the Obamacare Bailouts

If you’re going to do something illegal, it’s best to hide it in an obscure clause of an unknown bill.

The Transitional Reinsurance program and the Risk Corridor program, both corollaries of the Affordable Care Act, seem like tedious government initiatives packed with indecipherable jargon. But billions of dollars are involved in these programs — so it’s worth paying attention. That’s why Generation Opportunity, a grassroots organization based in Arlington, Virginia, created a coalition with more than 50 organizations to request this week that Congress put a stop to government bailouts for Obamacare.

Companies paid a total $362 million but requested reimbursements for $2.87 billion.

First, here’s a look at these two bailout programs.

Congress passed the Risk Corridor program as a way to give insurance companies that participated in the Obamacare marketplaces a three-year financial buffer. Those companies who made large profits would turn over their profits to the government — which would then use that money to bail out the companies who suffered losses. The program was supposed to incentivize insurers to participate in the marketplaces. It was insurer’s insurance.

But in the end, “there were no profitable companies,” explains David Barnes, policy director at Generation Opportunity. “At the end of the year, they all submitted claims to the government to say, ‘We lost all this money on Obamacare. Pay up.'” The government had received only one-eighth of the money needed to meet those losses.

Companies paid a total $362 million but requested reimbursements for $2.87 billion.

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Congress responded by passing a law that made it illegal to use taxpayer money to backfill that hole. But the hole keeps getting bigger. “The administration hasn’t said how much money they’ve collected for this year,” Barnes told LifeZette, “but they have said that all the money that came in went to pay 2014 obligations. They haven’t even gotten to pay any of the claims from 2015 that these insurers were asking for. By the time 2016 is over, there will be tens of billions of dollars that these insurance companies are expecting to have.”

“There will be tens of billions of dollars these insurance companies are expecting to have,” said a political analyst.

UnitedHealth left the Obamacare markets, citing $1 billion in losses for 2016 alone. That doesn’t even take into consideration the losses from 2014 and 2015, which are also unpaid. Aetna, Anthem, and Humana all lost more than $300 million this year. The government has promised to cover all these expenses and more.

The Obama administration is trying to circumvent the law by using taxpayer money from the Department of Justice to pay off the insurance companies. Since the Risk Corridor program did not collect enough cash to pay off companies with losses, many of the companies are suing the government for breach of contract. President Obama is trying to settle these lawsuits with payments from the Department of Justice budget, which he hopes will cover the losses they’ve reported.

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Insurance companies will receive their bailout from the Judgment Fund, also taxpayer-funded, circumventing any effort in Congress to prevent it.

“If you look at the history of corporate welfare, governments are always looking to give money to favorite companies for them to achieve different political objectives,” Barnes explained. “The Obama administration has a real strong interest in maintaining its legacy. They are trying to entice — or bribe — insurers to stay by providing bailouts. That’s what it really comes down to. They have a political problem they need to solve, and they’re solving that political problem using taxpayer bailouts. They’re not bailing out insurance companies so much as they’re bailing out Obamacare.”

We haven’t even gotten to the Transitional Reinsurance program.

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This is a key aspect of Obamacare. The government would levy taxes on large insurance companies with more than 100 million customers in order to bail out other insurance providers. The original law projected it would collect $25 billion, and it specifically outlined that $20 billion would go to insurers and $5 billion would go directly to the U.S. Treasury to cover ACA costs.

Congress specifically outlawed any attempt to use that $5 billion for any other purpose but to pay back the Treasury. But in a quiet memorandum from the Department of Health and Human Services, the Obama administration ignored the law and promised all the money to insurers.

“They’re giving all the money to insurers and nothing to the Treasury,” Barnes said. “Everyone who has looked at it has said that it’s not appropriate. But they went ahead and did it anyway and said, ‘Who’s going to stop us?'”

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Congress can put a stop to this illegal funding scheme. The Taxpayers Before Insurers Acts will recover the $5 billion that was supposed to go to the Treasury to recover losses from Obamacare. Additional legislation could also prevent the Judgment Fund or any other taxpayer money from backfilling the ACA deficit.

The Affordable Care Act is ultimately a failed law. “The administration is doing everything it can to get people to sign up,” Barnes said. “But it’s really expensive, and it’s not worth the money. So people are being good consumers and deciding they would rather save money and pay for themselves, and find other ways to pay for their health insurance. The administration is just trying to find more ways to prop up this law — they can’t admit that it didn’t actually solve any of the real problems.”