UNWINDING OBAMACARE

(23LH) 2/15/14
Republicans in congress cannot be satisfied to sit back and watch the disaster unfold., they should take the initiative, as they did at several crucial moments in 2013, and push legislation that would speed up the process of unwinding Obamacare and lay out for the public their concrete plans for a real reform.
The GOP should begin by renewing its commitment to protect Americans. That means jettisoning, or minimum delaying the individual mandate. The mandate has always been among the least popular elements.
The CBO assumed some $2 billion would be collected in 2015 form household forced to pay this uninsured tax for 2014. If the average payment is $500.00 that would mean 4 million Americans.
The Presidents unilateral decision to exempt those with canceled 2013 individual policies from the tax in 2014. Will the president take the next logical step himself and waive the tax in 2014. Republicans should make repealing this mandate and codifying the president’s own delay of the employer mandate, their top priority in 2014, just as it was in 2013.
Republicans should hammer the other weal link in the Obamacare chain: the back door subsidy that promises a massive bailout for insurance companies. It is there to persuade insurers to play ball despite the system’s irrationality.
Especially troubling is the “risk corridor” provision of the law, under which taxpayers are on the hook for covering large portions of the losses that insurers incur on the Obamacare exchanges. If an insurer pays out claims that exceed 108% of its premium collections, taxpayers would cover about 75% of its losses. A mirror image provision is also supposed to recoup 75% of any profits above the 108% of premium collections.
There was also a great deal of political pressure on insurers to lowball their premiums in the first year of the program. There will thus likely be few if any insurance rebating profits under this risk corridor provision.
It is hard to imagine that many Americans regardless of their political leanings want taxpayers to be on the hook for covering the losses of shareholder owned insurance companies. The promise of such a bailout effectively amounts to collusion between these companies and the administration at the expense of the public.
The losses of some insurers should be cushioned by funds drown form the profits of other insurers. That is how the CBO assumed these provisions would function in OBC and they projected them to be budget neutral. Exchanges are not rational insurance markets and its risk-corridor provisions now look to be very far from budget neutral. This year it could easily cost taxpayers hundreds of millions and perhaps billions.
Rubio and Griffin bill would make them explicitly budget neutral, requiring that payments to insurers suffering losses be reduced proportionally so they total an amount no larger than the payments from he insurers reaping profits.
It is important to understand how crucial the prospect of taxpayer bailout of insurers is to the future of OBC. Insurers facing the prospect of participating in the exchanges in 2015 without the backstop of a taxpayer bailout would be forced either to price their products properly and therefore likely well above their 2014 premiums or withdraw form the exchanges altogether. Less attractive to middle income and moderate wage household who get little or nothing in subsidies.
A program that cannot survive without a massive taxpayer bailout of private insurers is not a program that is working. It is a program that is failing and needs to be replaced.
Republicans should respond with measure that help voters see that OBC is neither inescapable nor irreversible—by saying no to the mandates, the bailouts and the forced coverage cancellations that OBC requires to stay alive.

Sources—weekly standard, cbo, james capretta, yuval Levin,

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