As Insurers Report Losses, Federal Government Prepares for Bailout
Taxpayer Money Will Be Used to Protect Private Companies
(Washington, D.C.) – Insurance companies across the country have started to report large losses during the first part of the year related to their participation in the Affordable Care Act, also known as Obamacare. In Massachusetts, the top three insurance companies reported a combined loss of nearly $133 million, while in Hawaii the two largest insurance companies recorded $36 million in losses and $46 million in fees related to Obamacare. Provisions in the healthcare law allow companies to claim federal funds to offset losses if insurance premiums are not high enough to cover the greater cost of insuring new patients. President Obama has allotted $5.5 billion through 2016 to compensate insurers for losses stemming from the policies they sell under the new health care law.
Some in Congress have proposed limits on the total funds that can be provided to insurance companies to ensure they do not lose money from participating in the new program. Insurers recently wrote to the Obama Administration in opposition to such limits, saying that they might be forced to raise rates if a cap was placed on the total level of bailouts. The HHS recently gave in to these requests, allowing companies to claim more funds than had been allocated by the White House for these bailouts.
Daniel Garza, Executive Director of The LIBRE Initiative, released the following statement:
"The idea that private companies are settling in to collect their share of a bailout while working families continue to struggle with increasing health care costs is wrong and irresponsible. The Administration is gambling with taxpayer dollars at a time when individual budgets are stretched and the national debt continues to skyrocket. The Affordable Care Act is built on costly mandates and unworkable price controls. It's preventing insurers from responding to consumer needs, and putting Washington in charge instead. It's exaggerating physician shortages and reducing quality of care.
Americans deserve health care reform that works, but all they have seen instead are rising premiums and misspent tax dollars. President Obama and his allies in Congress should stop offering patches and short term solutions in the form of new taxes or regulations – and instead focus on reforming a law that until now hurts more than it helps."