Not only are we getting crappy insurance and a non-functional website--all for higher and higher rates--but if the insurance companies don't profit, guess who foots the bill?
If Obamacare fails, taxpayers get to bail out the insurers
...As of Oct. 25, exchange-plan enrollments across the country were well short of goals, threatening the whole program's viability. The signs of the predicted train-wreck are there – but if the devastating collision occurs, what then?
The answer: In the worst case, insurers get bailed out by taxpayers.
Last week on The Incidental Economist blog, Adrianna McIntyre explained a provision buried in the health care law called the “risk corridor.” It's one of Obamacare's three R's (along with reinsurance and risk adjustment) that are intended to protect insurers, especially in Obamacare's first three years....
...If an exchange plan's performance varies in either direction by more than 3 percent, it either collects a subsidy from federal taxpayers via the Department of Health and Human Services to recoup part (50 to 80 percent) of further losses, or it has to kick back a similar share of the excess profit....
So imagine that we do enter a “death spiral” situation in which a large number of exchange health plans lose big and very few turn sizable profits. This could result from a delay of the individual mandate (reducing incentive to sign up); or from the current open enrollment period being extended (during which the uninsured can literally sign up for insurance on the way to the hospital); or from lack of interest among the healthy uninsured; or from faulty websites deterring all but the most desperate from enrolling.
In the event of a widespread failure, whatever its cause, taxpayers potentially face a multi-billion dollar bailout of health insurers for losses outside the corridor.
Insurers are therefore safe. Politicians who back Obamacare may not be. If insurers' costs do rise to the level that they require a taxpayer bailout, they will also be announcing massive hikes to their insurance premiums for calendar 2015. That combination may not go over so well in a midterm election year.