Corporatism In America

Corporatism is defined by Merriam-Webster as “the organization of a society into industrial and professional corporations serving as organs of political representation and exercising control over persons and activities within their jurisdiction.” It is a serious intermingling of politics and corporations. It is currently what we have created in America with the passage of ObamaCare.

In its October issue, Townhall Magazine features an article entitled, “ObamaCare’s Illegal Insurance Company Bailout.” The article explains the role of major insurance companies in the writing of ObamaCare in such a way that regardless of the impact of ObamaCare, the insurance companies would not lose money. If the law has a negative impact on the insurance companies, they will be bailed out by the American taxpayers.

The article reports:

…Obamacare’s authors created three programs to help socialize insurance company risk.

Reinsurance: Obamacare’s reinsurance program is paid for by a $63 tax on all health plans.  The money then goes to any health insurance company who spends more than $60,000 on any Obamacare patient in any single year. Since the tax applies to all health care plans, but the benefits only go to Obamacare plans, the reinsurance program is really just a transfer of wealth from those who had insurance coverage before Obamacare to those who are now covered by Obamacare.

Risk Adjustment: The risk adjustment program is designed to stop insurance companies from marketing or pricing their plans in such a way that they only attract healthy, and therefore lower-cost patients. The program accomplishes this by assessing the patient population of each insurer and then determining which insurers are covering healthier people and which are covering sicker people. The plans covering the healthy people are then forced to pay money to the plans covering sicker people. All transfers between insurance companies even out.

Risk Corridor: The risk corridor program is intended to encourage insurers to price their premiums low by protecting them from losses if their patients turn out to require more care than anticipated. The program uses a complex formula to take money from those insurers that do not spend a lot of money paying for patient health care, and then gives that money to other insurers that do spend a lot of money on patient care.

So where does the money come from if all insurers spend more money on patient care than anticipated? That is the billion dollar question.

The article quotes an HHS regulation published in May 2014:

“In the unlikely event of a shortfall for the 2015 program year…HHS will use other sources of funding for the risk corridor payments.”

The article explains that according to the House Committee on Oversight and Government Reform, the Obama Administration is expected to make $725 billion in net payments out of the risk corridor program in 2015 alone. When you include the increased reinsurance payments, the bailout will top $1 billion.

So why is this illegal? The article explains:

According to long-standing, federal rules, in order for Congress to properly authorize payment, both the directive to pay and amount, and the source of funds for that payment, must be identified.

And while the risk corridor program does identify who is to be paid (the insurance companies), it never identifies where the funds should come from.

This is neither free enterprise or market-driven. It is time to replace ObamaCare with something that respects the free market and puts patients and doctors back in charge of health care. We need portability of health insurance, tort reform, and risk pools (as are used in auto insurance) to equalize the burden among insurance companies. We don’t need government-run healthcare. Government healthcare benefits no one. We need to stop it before it is too late.