Obamacare's hidden cost to taxpayers

John Podhoretz:

Another week, another possible unilateral and unconstitutional revision of ObamaCare from the White House — this time in the way the bill was successfully designed to buy the support of the nation’s insurance companies.

A few more months of this, and as Election Day approaches the president will be announcing that everyone will get a free oil change with their ObamaCare.

Susan Ferrechio of The Washington Examiner reports that the administration may extend the subsidy program it offered to insurers beyond 2016, when the program was set to expire.

What? you say? Subsidies to evil rich insurance companies? Yessiree.

Under ObamaCare, insurers are at risk of losing money if they sign up too many sick and elderly people and not enough young and healthy people.

All insurance is based on the “risk pool” concept: Some people (typically the young and healthy) don’t use much health care, so they cost their insurer less than they “pay in” in premiums; that covers the people (typically older and sicker) who take out more than they pay in. If more people take out than put in, the insurance companies have a cash-flow crisis.

This was deemed a particular danger at the beginning of ObamaCare, while the new health-care system found its sea legs. To help insurers avoid disaster, the government promised to mitigate the damage insurers would suffer through a “risk corridor” mechanism that would funnel money to insurers with especially large losses.

In theory, this would work both ways: If the companies make way more than they should, they have to give back to the government. This actually happened with the “risk corridor” subsidy in the 2003 law creating a prescription-drug entitlement under Medicare — the program proved so successful and smooth that insurers sent money back to the government.

But there’s no hope of that happening with ObamaCare, given the disastrousness of its rollout. Meanwhile, the companies have taxpayers over a barrel, as Yuval Levin writes on National Review Online.

The new law “commits taxpayers to cover insurance-company losses beyond a certain level and places no limit on the taxpayers’ exposure to the risk of such losses,” Levin says. “Taxpayers could easily end up turning over billions to cover insurer losses.”
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The costs are out of control and the benefits are negligible.  I find it strange that some people are resigned to being stuck with this mess.