Is an Obamacare bailout worth BILLIONS on the horizon?

http://www.dailymail.co.uk/news/article-2635340/An-Obamacare-bailout-horizon
-Risk-corridor-payments-insurance-companies-grow-BILLIONS-dollars.html

The Affordable Care Act included a way for insurance companies to recoup
their losses from covering everyone regardless of their health
If insurers lose money, the government's funds - taxpayer dollars - cover
between 50 and 80 percent of the losses for three years
Premiums for 2015 are expected to skyrocket before the November elections,
and Democrats hope the payments will keep prices down

When the Obamacare law passed in 2010, it omitted the authority for the
government to make these 'risk corridors' payments
But in a bit of regulatory sleight-of-hand last week, the Health and Human
Services Department quietly issued a regulation authorizing them

Health insurance companies are poised to have access to billions of taxpayer
dollars in what Republicans are calling an Obamacare 'bailout.'

In a little-noticed regulation issued late last week, the Department of
Health and Human Services authorized massive payments to insurers that lose
money because of the Affordable Care Act's requirement that they cover even
the oldest and sickest Americans.

A provision of the Obamacare law known as 'risk corridors' provides the
safety valve for insurance companies if they keep rate hikes modest but
still wind up in the red.

According to that system, insurers whose claims in 2014 are 3 per cent
higher than what was projected will recover half of the different from the
government.

If claims are 8 per cent or more above projections, taxpayers cover 80 per
cent of the company's losses.

An aide to a member of the House Republican leadership told MailOnline that
the risk corridor system was calculated to cushion the blow of rate hikes
until President Barack Obama is out of office.

'They set the risk corridors to expire in three years,' the staffer said.
'Guess who will be long gone from the White House by then?'

'This is just another taxpayer-funded subsidy for big businesses. If the
Obamacare system were fair, it would force insurers to price their policies
according to reality. Of course, if that happened, rates would double and
you'd see well-deserved panic in the streets.'

'The American people are sick of Washington picking winners and losers,
especially since the chosen losers often end up being taxpayers who foot the
bills for Washington's mistakes,' Rubio said then.

Democrats have long feared that if rates jump too much and too quickly,
consumers could abandon their insurance entirely and opt to pay modest fines
instead. That could collapse the entire system.

The Los Angeles Times first reported on the new HHS regulations, and noted
that the 2015 rates will be published just weeks before November's
congressional midterm elections.

An HHS spokesman told The Wall Street Journal in January that the point of
the risk corridors was to help smooth out some of the uncertainties
associated with an entirely new pricing structure, and that the program was
expected to be 'budget neutral.'
That's because insurers that make more profit this year than they estimated
will be forced to surrender a portion of their excess to the federal
government - providing finds to reimburse their less fortunate competitors.

The Congressional Budget Office estimated in February that the government
would actually reap a windfall, since insurers were more likely to aim high
when pricing their policies under the new Obamacare requirements.

The CBO estimated that while the government would pay out $8 billion to
underperforming insurers between 2015 and 2017, it would collect $16 billion
from more successful companies.

But if CBO is wrong and a the gap remains, HHS intends to spend whatever it
takes.

'We are confident this three-year program will not create a shortfall,'
Health and Human Services spokeswoman Erin Shields Britt said Wednesday in a
statement. 'However, we want to be clear that in the highly unlikely event
of a shortfall, HHS will use appropriations as available to fill it.'

Those funds could come from anywhere in the HHS budget, pilfering money from
research programs, social services or public health programs.

When the law was passed in 2010, its framers omitted the authority for HHS
to spend money on risk corridor payments.

Last week's regulation erases that mistake, authorizing HHS to write checks
to insurers.

By Epictetus