“Fixing” Obamacare Means Taxpayers Spend More for …

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  • Transforming Health Care: Understanding the Affordable Care Act and What Might Come Next
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    Transforming Health Care: Understanding the Affordable Care Act and What Might Come Next
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Author: David Hogberg

Last week a group of moderate Republicans and Democrats calling themselves the “Problem Solvers Caucus” released a set of proposals in the wake of the GOP’s failure to repeal Obamacare. One of the proposals is supposed to “stabilize” the Obamacare exchanges. What it really amounts to, though, is forcing taxpayers to shell out even more money to prop up a government-mismanaged health insurance system that is expensive and of poor quality.

Unfortunately, the chances are better than even that this makes its way to President Trump’s desk. Most Democrats will vote for it because it might help them get the edge on the health care issue again.

Combine that with the moderate Republicans getting nervous about the 2018 elections, and it could have majority support in both chambers of Congress. And don’t count on GOP leadership standing in the way.  Senate Majority Leader Mitch McConnell (R-Needs To Retire) suggests he’s open to it.

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Here’s my shocked face:

The Problem Solvers Caucus wants to create “a dedicated stability fund that states can use to reduce premiums and limit losses for providing coverage—especially for those with pre-existing conditions.”

The state of Alaska set up such a fund in 2016 with state taxpayer money to defray the costs of the sickest enrollees on its exchange. After setting up the fund, Premera, Alaska’s only remaining insurer in the exchange, said it would be increasing premiums by only 7 percent for 2017, down from the 42 percent increase it had previously announced. In June, Alaska received a waiver from the Department of Health and Human Services (HHS), which means that federal money —an estimated $ 332 million from 2018-2022— will flow into Alaska’s fund.

If you think that means taxpayers will pay less since premiums that rise more slowly result in the federal government paying out less in premium subsidies, you would be wrong. Rather, the money that would have gone toward premium subsidies will now be diverted to Alaska’s stability fund.

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Worse still, Alaska taxpayers will have to come up with another $ 11 million in 2018 on top of the federal money for the fund. A rough, back-of-the-envelope calculation shows that taxpayers would fork over at least $ 10.1 billion more annually if all states participated in the stabilization fund. (For the math, go to the bottom of this post.)

Here are a few other thoughts on this, in no particular order:

First, why is this even necessary? Obamacare supporters promised us that it would cut the cost of a typical family’s health insurance premiums by $ 2,500 a year.  Instead, the average premium has risen 105 percent from 2013-2017 on the federal exchanges. It seems stupid to pump more money into such a system.

Second, some are referring to these as “reinsurance” funds. That’s misleading, at best. These are taxpayer funds going directly to insurance companies so that they won’t continue to take losses on the exchanges. Depending on your perspective, that’s either a subsidy or a bailout, but it’s not reinsurance.

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Third, don’t get giddy over the fact that Alaska’s exchange will see a 21 percent drop in premiums in 2018. That’s a 21 percent decline after an increase of 203 percent from 2013 to 2017. Don’t expect such drops to continue unless taxpayers are forced to pump even more money into these funds.

Finally, this will do nothing to solve the problem of rising health care costs in the U.S. But, it just might help moderate Republicans get reelected in 2018.

Crossposted at Bombthrowers.


The Math: As noted above, Alaska will pay $ 11 million into the stabilization fund in 2018. Currently there are 19,145 enrollees in Alaska’s exchange. And $ 11 million divided by 19,145 yields $ 574 per enrollee. There are about 17.6 million people enrolled in the Obamacare exchanges. That number multiplied by $ 574 equals just over $ 10.1 billion.

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