What Blue Cross Blue Shield Didn’t Tell You about Reinsurance
An hour ago, the Blue Cross Blue Shield Association released a blast e-mail to Hill staff trying to justify their support for Obamacare’s reinsurance bailout. Here is a quick fact check of their claims:
CLAIM: “Health plans were required to reduce their premiums based on the federal reinsurance rules in place.”
FACT: This talking point fails to mention that reinsurance “assessments” — $63 per person in 2014, $44 in 2015, and $27 this year — RAISED premiums for the majority of Americans with employer-provided health plans — 175 million in 2014 — so that a select few individuals with Exchange coverage could have slightly lower rates. Raising premiums for some people to lower people for others is “spreading the wealth around,” to use Barack Obama’s famous phrase — but it doesn’t lower underlying health costs, and it doesn’t represent the $2,500 in lower premiums Barack Obama repeatedly promised.
CLAIM: “The transitional reinsurance program receives no federal funds.”
FACT: The reinsurance program uses the coercive power of the federal government to collect the dollars — making them federal funds. Even the BCBS-distributed literature admits reinsurance funds were collected by “assessments” — i.e., a non-voluntary requirement on all health plans to pay the federal government.
Most federal entitlement programs — Social Security, Medicare, welfare, food stamps — are by their nature redistributive, taking money from some people and giving them to others. Do Republicans believe THOSE programs do not represent “federal funds?” Of course not. The same principle applies here. Or do BCBS representatives believe all Americans with employer plans would willingly pay $63 per year in higher premiums to help out their friendly health insurers?
CLAIM: “Reinsurance payments to health plans have been below the amounts specified in the statute.”
FACT: This claim misses two points. First, on a per-enrollee basis, insurers in 2014 received nearly 50% more in reinsurance funds than they assumed when setting premiums for that year. And you don’t have to take my word for it — that conclusion comes from a paper released by the Commonwealth Fund, not exactly a bastion of conservatism.
Second, in 2014 the federal Treasury received exactly ZERO dollars from the reinsurance program — even though the Congressional Research Service and other independent experts have said the law is clear: The Treasury Department, and NOT insurers, stand first in priority for reinsurance assessment funds.
CLAIM: “The privately funded reinsurance program reduced costs for taxpayers.”
FACT: First, because the Obama Administration illegally prioritized insurers over the Treasury as explained above, the reinsurance program stands to stiff taxpayers out of billions of dollars in repayments. Second, any supposed reduction in the cost of federal insurance subsidies came solely as a result of “assessments” — i.e., taxes — on employer-provided health plans. Whether taxpayers pay as a result of a front-end reinsurance “assessment” or as a result of the back-end cost of federal insurance subsidies is essentially immaterial — a tax is a tax is a tax.
The fact of the matter remains: The reinsurance program remains an illegally-manipulated system of corporate welfare, and insurers are fighting to retain money that legally belongs in the Treasury. It’s worth noting that nowhere in the BCBS documents do the Blues even attempt to argue the legality of the program as rejiggered by the Obama Administration. Their argument to Congress therefore amounts to, essentially, “We stole that money fair and square!”
Members of Congress who want to 1) stand on the side of taxpayers, 2) oppose crony capitalism, and 3) oppose Obamacare should support every attempt to reclaim funds from the reinsurance program — and prevent a risk corridor bailout.