And now, Congress is preparing to bail out the health insurance companies that are losing money because of the law their lobbyists wrote:
This week, as part of the reconciliation bill, Congress may vote on bailing out health-insurance companies losing money from their participation in the Affordable Care Act exchanges.
Sen. Marco Rubio is leading the fight against the bailouts. In a letter to congressional leaders, he wrote: “The reason these health-insurance companies are enduring a financial loss is that Obamacare is a disastrous law. It broke the promise to lower health-insurance premiums and allow Americans to keep their health care. Now the very architects of this law are attempting to place taxpayers on the hook.”
Last year Rubio limited the bailout of the insurance companies with the Obamacare Bailout Prevention Act. Some of the provisions were included in last year’s spending bill. The result of the measure was that, in October, the Department of Health and Human Services transferred $362 million to the losing insurance companies, rather than the $2.9 billion that they requested. That’s $2.5 billion more for taxpayers.
Honestly, how bad do you have to be in business to lose money when you are a cartel? Here’s what you should have learned in Econ 101:
In economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics. Cartels usually arise in an oligopolistic industry, where the number of sellers is small or sales are highly concentrated and the products being traded are usually commodities. Cartel members may agree on such matters as setting minimum or target prices (price fixing), reducing total industry output, fixing market shares, allocating customers, allocating territories, bid rigging, establishment of common sales agencies, altering the conditions of sale, or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members’ profits by reducing competition
And that’s what the Patient Protection and Affordable Care Act did. It cartelized the market for health insurance (note that the PPACA had nothing to do with health care).
And add this to the huge amount of evidence that people in government don’t understand that people respond to incentives:
Insurance companies thought they would have a captive market of young, healthy people who would be forced to sign up for expensive policies with the threat of penalties. But it was a cynical scheme. The premiums from young people, who do not use much health care because they are rarely sick, would be used to pay for the care of the old and the chronically ill. The Affordable Care Act was structured so that younger, healthy Americans would pay for everyone else, even though the young have higher unemployment rates, less disposable income, more student loans and fewer assets.
Little did these insurance companies know that enrollment would fall far short of predictions.
Yeah, because they’re morons. Healthy young people don’t use health care all that much, so they don’t see the need to pay for something they will never use. And I hope you don’t have to re-read that paragraph above to realize that what actually happened was a bunch of sick old Baby Boomers wrote a law in order to force their grandchildren to pay for their (the Boomers’) health care.
Something tells me that Nana and Pop Pop are in for a surprise when their grand kids show up to visit them in the hospital…