Congress’s $12 billion giveaway to health insurers
As Congress rushes to pass an omnibus tax/spending bill for the coming year, it’s concocting a special tax break for health-insurance companies.
And it amounts to a back-door bailout.
Until this week, insurance-company lobbyists and their allies in the White House were pushing for an outright bailout, spending taxpayer dollars to cover what insurers are losing on ObamaCare plans to persuade insurers to keep selling them.
That so infuriated the public that DC insiders switched gears. Now they’re offering a tax break for the whole health-insurance industry.
Don’t be fooled. This is good news for the insurers — but only insurers. The taxpayers are still on the losing side in this crony-capitalism deal.
ObamaCare is collapsing like a house of cards. Last week, insurance giant CIGNA hinted it will drop out of ObamaCare after 2016. Earlier, the biggest insurer in the nation, UnitedHealthcare, revealed it will likely quit ObamaCare after 2016. Though these insurers are highly profitable overall (their stocks are soaring), they’re losing billions trying to sell the unpopular ObamaCare plans.
If insurers drop out of ObamaCare, the president’s health law will collapse. And that’s not the only threat to the disastrous health-care law: Republicans are still trying to kill it, too.
Last week, the Senate passed a bill to repeal the Affordable Care Act. That was mere Kabuki theater, because President Obama will veto it. What matters is what Congress is doing in this week’s bill to keep insurers happy.
Nearly all insurers are bleeding red ink trying to sell ObamaCare plans. UnitedHealthcare’s bombshell announcement that it might drop out rattled the law’s supporters. Just hours later, the Obama administration tried to calm insurers, sending out a memo full of reassuring promises. It vowed to go to Congress for funding to reimburse insurers for their losses.
The administration wanted to put tax dollars into a program set up under the Affordable Care Act called “risk corridors.” Insurers profiting under ObamaCare are supposed to pay into this program to help other insurers who are losing money.
But with nearly all insurers losing money on ObamaCare plans, there’s not enough money in the pot. That’s why the Obama administration pushed for a bailout.
Here’s the Obama administration’s playbook: First, pass a law requiring the public to buy insurance-company products. Then impose big penalties on anyone who doesn’t buy. Finally, when insurers still can’t make money, bail them out using taxpayer dollars.
Outrageous. Fortunately, Republicans in Congress showed backbone and refused to go along. By the end of last week, the bailout idea was dead.
Behind the scenes, the White House and insurance-industry lobbyists continued to press Congress for special concessions to insurers.
With all that pressure, Congress’ principled stand started to crumble. The omnibus bill reportedly contains a huge tax concession to the same industry.
Money is fungible, and this rewards the same players. The new deal suspends the health-insurance tax for a year. That tax applies to all health-insurance policies, not just ObamaCare. It was enacted as part of the Affordable Care Act to help pay for it.
Suspending the tax is in effect handing the industry an estimated $12 billion a year, according to the Congressional Budget Office, exceeding even what insurers would’ve received in a bailout.
“Congress shouldn’t subsidize White House cronies,” says Doug Badger, a former White House policy adviser. But that’s exactly what’s happening here.
Plenty of tax breaks are good. But this one shifts the burden onto the rest of the nation’s taxpayers.
ObamaCare has to be paid for. That was the purpose of this tax. If insurers don’t pay it, then the rest of us or our grandchildren will have to.
Meanwhile, any lobbyist-driven deal that rewards insurers, while the public faces soaring deductibles and co-pays and limited access to doctors, is a cruel trick. We, the people, deserve better.
Betsy McCaughey is the author of “Beating Obamacare” and a senior fellow at the London Center for Policy Research.