ABOUT THOSE ENROLLEES …
At this point, the fact versus fiction on U.S. president Barack Obama‘s socialized medicine monstrosity is nauseatingly clear. The law didn’t reduce costs. It isn’t going to reduce the deficit. And if you liked your old plan, it turns out you can’t keep it.
Nancy Pelosi once said that Obamacare had to be passed in order to be understood (we’re paraphrasing), and slowly but surely people are starting to understand it … which is one reason Obama’s popularity is at a record low.
(Now let’s just hope the Supreme Court understands the law).
Our friend Rick Manning over at Americans for Limited Government (ALG) has a great piece up this week diving into the nuts and bolts of Obamacare’s biggest failed promise – the notion that healthy young subscribers would sign up in droves to subsidize the law’s “free” coverage.
It turns out huge percentages of individuals who signed up for Obamacare aren’t paying premiums, though – including roughly 30 percent of those who signed up for coverage with insurer Aetna.
Why not? Because the coverage isn’t worth the cost.
“The problem of Obamacare subscribers dropping from the system is likely to become more acute in 2015 as health insurers are announcing rate increases that continue to far exceed inflation,” Manning wrote, adding that “as health insurance continues to take a larger bite out of people’s earnings, it is not unreasonable to expect that more and more of the individuals who have signed up for coverage will opt to pay a much smaller fine for failing to have insurance and take their chances that they won’t face catastrophic illness.”
Why does this matter? Because if people decline coverage due to rising costs (even if it means paying a penalty), providers’ have to totally rework their risk factors, etc. And they have to find some way to make up the gaps that keep them compliant with Obamacare’s mandates.
The liberal authors of this legislation realized this possibility/ probability. That’s why under Obamacare, insurers are eligible for taxpayer-funded bailouts against these losses. As Manning explains, one section of the law provides for “risk corridors” related to the law’s expanded coverage. These “risk corridors” impose an affirmative obligation on taxpayers to subsidize any financial losses related to compliance with the law.
“The Washington, D.C. merry go round continues with those who help to write the laws protected from business losses with bailouts provided by the rest of us,” Manning concluded. “A completely predictable outcome of any legislation whether any lawmakers read it or not.”
U.S. Sen. Marco Rubio (R-Florida) has sponsored legislation that would repeal the bailout clause of Obamacare. Despite our misgivings about him, we support that effort.