The hue and cry that have erupted largely from the Democrats – and other like-minded organizations such as the American Medical Association – over President Trump’s recent executive order rescinding payments to large insurance companies was not unexpected.
However, the legality of these federal reimbursements was questioned from the very beginning. These so-called “cost-share reduction” payments, or CSRs, were unsubtle bribes to insurers to remain in the new health exchange game and avoid huge losses. When presented to Congress for appropriation four years ago, the legislators balked, but then-Treasury Secretary Jack Lew ordered the release of these funds anyway. Subsequent legal efforts by the House of Representatives and a federal court judge failed to halt the CSRs, although they were deemed unconstitutional.
Had it done its budgetary homework correctly, the Obama administration would have realized that it had vastly underestimated the costs of Obamacare. Without the CSRs, the large insurers would have left the health exchange market, tanking any possibility of competitive health care plan pricing. Note that subsidies – i.e., tax credits – to individual plan purchasers is not directly affected by this executive order, although the large insurers may reflexively jack up healthcare plan premiums even further to compensate for the withdrawal of CSRs, should that actually occur.
Like the big automobile industry bailout of 2009, this preemptive bailout of the large insurance companies has also been taxpayer-funded, although the load has been borne largely by those who have not needed health exchange insurance plans. If this latest move by the White House were on a chessboard, it would be seen as a “check” on the Democrat’s darling legislation, the Affordable Care Act, passed with one Republican vote in the House and none in the Senate, seven years ago.
While the effects of this executive order would not be realized until next year, it should rightfully compel both parties to cooperate in crafting new legislation that will do its best not to disadvantage either current health care plan holders or taxpayers. I find it exceedingly difficult to have any sympathy for the large insurers that have been the true beneficiaries of this governmental largesse.
It is high time for them to share in some of the pain they have meted out for the past four years through the higher deductibles, higher premiums, and denials of payment.