Controlling healthcare costs was one of the main goals of the President’s healthcare law, but millions of American patients have seen quite the opposite happen over the past six years. Facing higher compliance and coverage expenses on top of onerous mandates, healthcare companies have increased costs dramatically.
Pharmaceutical companies, for instance, have struggled with the large up-front costs associated with navigating life-saving medications through the convoluted approval processes at the Food and Drug Administration (FDA). And insurance companies, in order to meet all coverage requirements while insuring high-risk policy holders at the same rates as low-risk policy holders have hiked premiums while simultaneously increasing out-of-pocket costs for enrollees.
Instead of honestly examining all cost drivers and taking the necessary steps to lower costs for businesses and taxpayers, the Obama administration has instead simply worked with insurance companies to extend corporate welfare to protect them.
On top of the billions in subsidies and the mandate that Americans buy insurance, the health care law includes several transitional programs intended to help insurers meet their bottom lines during implementation. These companies are currently struggling to so, so they are lobbying members of Congress to extend these programs and expand their scope. Increasingly, insurers are threatening to abandon the Obamacare exchanges they receive more handouts on top of the billions of dollars they’ve received to date.
Particularly troubling is the abuse of the Transitional Reinsurance Program, which directly reimburses insurers for providing coverage to high-cost people. The Center for Medicaid Services (CMS) has used this program to improperly withhold $4 billion to date from the Department of Treasury in order to make payments to insurance companies for their losses. Congress should ensure that this expires at the end of the year, as currently scheduled, it should require CMS to return these dollars back to the Treasury.
A second concerning program is the risk corridor program, a provision that would allow insurance companies to underwrite risk policies that they wouldn’t otherwise cover, potentially putting taxpayers on the hook if the costs of a plan run higher than expected. Congress should oppose insurers’ demands to remove language requiring the risk corridor program to be revenue neutral.
Also disconcerting is how the Obama administration has unlawfully spent $7 billion of taxpayer money on the cost-sharing reduction (CSR) program under Obamacare. These subsidies go to insurance companies — not people — and they are intended to off-set their costs for making payments to reduce co-payments, deductibles, and other out-of-pocket costs for qualified people. House Ways and Means Committee Chairman Keven Brady and Oversight Subcommittee chair Peter Roskam recently brought these problems to light in partnership with Energy and Commerce Committee Chairman Fred Upton.
The insurance industry uses front groups in order to make its case for these bailouts, notably the Campaign for Sustainable Rx Pricing (CSRxP). While CSRxP brands itself as a “broad-based campaign working to curb rising drug costs,” a closer look at its membership and its policy proposals tell a different story. CSRxP represents around 20 groups that are nearly all health care providers, some of whom have cozy ties with the Obama Administration and were integral in crafting the healthcare law. The group’s members include big players in the insurance industry, such as Anthem, Blue Cross Blue Shield and the provider trade group America’s Health Insurance Plans (AHIP).
Consider the group’s consistent calls for price controls and overreaching regulations that would threaten research and development investment. Or its consistent attempts to shift the blame for the poorly-performing exchanges away from insurers onto other industries, such as the biopharmaceutical industry. F These policies and messages indicate the close relationship of insurance companies and the Obama administration. They work hand-in-hand to hide the truth: Obamacare is failing to contain costs and insurers are not making the profits they anticipated under the law.
For an organization that is so visibly connected to the Obama administration and architects of the Obamacare, it’s ironic to see CSRxP violate another ostensible main goal of Obamacare in addition to controlling costs: holding insurers accountable.
Perhaps the biggest tragedy of Obamacare is that regular Americans may end up paying for it twice—first through higher premiums and cancelled plans, second with their tax dollars going toward insurer bailouts. Congress should reject efforts to bail out insurers using Americans’ tax dollars. Corporate welfare should not be the foundation for national healthcare policy. American patients and taxpayers deserve much better.
Christine Harbin is Director of Federal Affairs and Strategic Initiatives for Americans for Prosperity.