Mt. Vernon Register-News

Opinion

November 23, 2013

Obama's insurance fix risks unraveling his own law

President Barack Obama tried to salvage his health-care law last week, in the face of his broken promise that people who like their health-care plans can keep them. But in so doing, he may have made things worse.

Obama’s executive action allowed insurers to reinstate, for one year, plans that don’t comply with some of the Affordable Care Act’s requirements, including benefits mandated by the law and the maximum cost-sharing permitted under it. Unfortunately for the Obama administration, many Americans still won’t be able to re-enroll in their insurance plans.

Worse yet for the president, his fix may undo the very law he’s defended and fought for since its passage more than three years ago. At the very least, it significantly weakens his and his allies’ defense of that law.

Obama’s edict puts him in the awkward position of endorsing an open-ended, taxpayer-funded bailout of the same insurance companies that he and his congressional allies have been demonizing.

Obamacare includes three mechanisms to help insurers with the costs created by the law’s blanket prohibition on excluding people with pre-existing conditions or charging higher premiums based on health status or gender. Those mechanisms are important, because without them an insurer that takes on a disproportionately high number of costly patients could find itself bankrupt.

Those safeguards are a risk adjustment program, which shifts money among insurance plans based on the relative health of their enrollees; a reinsurance program, which provides additional funds to health plans that enroll individuals with very high medical spending; and a three-year “risk corridor” program designed to compensate insurers that misprice their premiums.

The risk adjustment and reinsurance programs rely on funds from insurers themselves — the reinsurance program, for example, is financed by assessments collected from pretty much all insurers. So regardless of how well those programs work, taxpayers aren’t on the hook.

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