Last week, Moody’s rating agency lowered the outlook for health insurers from stable to negative, blaming Obamacare. Few Americans will shed tears for insurance companies. But the Moody’s announcement is a warning sign to taxpayers. They’ll be getting clobbered. Section 1342 of the Affordable Care Act forces taxpayers to make insurers whole for most of the losses incurred selling Obamacare exchange plans through 2016. The bailout is designed to conceal the failure of the president’s signature health law until he is out of office.
No one in the Obama administration talked up the advantages of bailing out insurers. It was kept under wraps until the fall of 2013. That’s when five to six million health plans were cancelled because they didn’t comply with Obamacare’s one-size- fits all coverage requirements effective January 1, 2014. . Insurers developed new plans, as the health law required, set premiums (generally higher) and sent out notices cancelling the old plans.
That caused public outrage. Trying to quell it, the president ignored his own law and told insurance companies on November 14 they could keep selling the old plans. Insurers were caught off guard. They predicted there would be less demand for their new plans, and they’d lose money.
Here’s where the plot thickens. On the same day, an Obama administration health official, Gary Cohen, announced that the federal government (taxpayers) will offset most losses, citing section 1342. Sweetening what the law already guarantees, he pledged to “modify” the bailout’s “final rules to provide additional assistance.”
That’s when Congress finally did its job and read section 1342. Senator Marco Rubio (R. Florida) called it a “dirty little secret” and offered legislation to repeal it. House Republicans held a hearing at which Secretary of Health and Human Services Kathleen Sebelius confessed that the administration had never tried to estimate what the guarantee could cost taxpayers. Ah, how freely government bureaucrats spend other people’s money.
Thursday’s downgrade underscores the likelihood that taxpayers will be socked with bailout costs of unknown proportions unless section 1342 is repealed.
That’s just one reason for repeal. Another is that Section 1342’s purpose is to bamboozle the public and hide Obamacare’s inevitable failure until health “reform” is entrenched beyond turning back.