Politics & Policy

The Litmus Test on Obamacare

(Bryan Sikora/Dreamstime)
An arcane-sounding provision about ‘risk corridors’ limits the damage of Obamacare.

On December 11, the current continuing resolution, which keeps the government funded, expires. Little noted but every bit as important, the risk-corridor budget-neutrality provision — the one provision Republicans have enacted that actually mitigates the ill effects of Obamacare, and that has done a great deal to expose the structural failings of the law — expires with it.

This provision puts a cap on the amount that government will reimburse insurance companies that wind up with a disproportionately unhealthy pool of customers and therefore with disproportionate costs for their health care. Without that cap, we will return to blank-check corporate welfare for insurance companies. To stop that happening, the provision must be reauthorized in the omnibus spending bill, which in one form or another is likely to pass either this week or next.  

Sadly, while such a reauthorization is in the omnibus bill now, some news reports indicate there is a very real risk that it will be left on the negotiating-room floor, as Democrats focus on killing it and Republicans use it as a bargaining chip to achieve other priorities they deem more important.

That’s remarkable when you consider that reinstating and preserving the risk-corridor cap would constitute a real win on what has been Republicans’ marquee issue for the past five years, help them politically next year, and significantly advance the prospects of repealing the unworkable health-care law. In contrast, bailing out insurance companies (what will happen if Congress doesn’t reauthorize the cap) will cripple Republicans politically and in their policy goals, while helping Democrats.

RELATED: Under Obamacare, Hospitals Merge, Doctors Merge, and Patients Pay More for Less

The risk-corridor program is relatively unknown among the public, but it is one of the vehicles the Obama administration used to shower open-ended money on the insurance industry. In its efforts to gain the industry’s support for the Affordable Care Act, the Obama administration promised to automatically use taxpayer money to fill the coffers of any insurance company that didn’t make a sufficient profit under the new regime.

This is crony capitalism at its worst. Individual Americans who have been harmed by Obamacare aren’t eligible for an administration-provided bailout. Nor did doctors get help with the increased costs of bureaucratic compliance. Instead, the administration gave top priority to the interests of its corporate friends and supporters, and created a vehicle to funnel money from taxpayers to those companies that chose to set their prices low in an effort to grab market share, secure in the belief that the Obama administration would force taxpayers to fund their losses.

#share#Republicans have a moral duty to prevent this bailout from occurring. Last year, thanks to Senator Marco Rubio, the omnibus bill included a provision that required the risk-corridor program to be revenue neutral. This prevented an estimated $2.5 billion from flowing from taxpayers’ pockets into the bank accounts of big insurance companies. Without this windfall, insurers had to adjust their premiums and pricing policies to reflect their actual costs (otherwise known as “the free market at work”), giving Americans a better sense of how the new law is actually working — and how it isn’t.

RELATED: Democrats Asked for Obamacare but Now Try to Duck Out of Paying for It

Republicans also have a political duty to prevent this bailout if they are serious about achieving repeal. Repealing and replacing Obamacare will be much easier if the insurance companies stop viewing it as a permanent taxpayer-subsidized gravy train that rewards ever-increasing premiums and deductibles. On the other hand, as Doug Badger of the Galen Institute explained, “If the risk corridor language is stripped from the Omnibus, insurers who are implementing Obamacare will feast on roughly $5 billion or more of corporate welfare ($2.5 billion for the 2014 plan year and probably at least that much for the 2015 plan year), and they will go into the spring bidding process confident that the government will slip them billions if they continue to play ball with the Administration.”

#related#The reality is that the budget was set in October; that ship has sailed. The benchmark here isn’t a fiscally responsible omnibus. Rather, the choice is either (a) a best-we-can-get bad omnibus (and let’s be clear: There will be much to dislike and even detest) but one that includes some things that really matter, or (b) an even worse omnibus bill with few or no wins. Refusing to vote for either is tantamount to voting for the worse one, because each protest “nay” vote gives Democrats more opportunity to cast the deciding “yea” vote.

Symbolic votes like the repeal vote last week are important. But as Michael Cannon of the Cato Institute put it, if the risk-corridor provision is not extended in the omnibus bill, Republicans will have voted in week one to repeal Obamacare, and then in week two voted to bail it out.

So if you want to see Obamacare slowed, stopped, and rescinded, call your representative and let him or her know that the extension of the risk-corridor cap must be reauthorized in the omnibus bill, and that this is a litmus test for whether our representatives are serious about achieving repeal.

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