Rubio: “To be told that at a time when all of these challenges are happening in the personal economy of so many people, that billions of dollars of taxpayer money is going to go to bail out this law, there is going to be collective outrage across the political spectrum in this country, and rightfully so.”
U.S. Senator Marco Rubio
Remarks On Potential Taxpayer Funded Bailout Under ObamaCare
U.S. Senate Floor
January 16, 2014
I also wanted to take a moment to talk about an emerging problem with the health care law that has only begun to filter out in the news cycle, but I think bears watching in the days and weeks to come.
As we all know, a key part of the health care law is the exchanges, which are theoretically supposed to be competitive, private marketplaces where individuals can go online, either through their state exchange or the federal exchange, and buy health insurance at a competitive price, and you can choose between these different plans. That’s the idea behind a health exchange. And in and of itself, the idea of an exchange is not a bad one, if appropriately administered and it doesn’t come accompanied with all the other things the health care law came accompanied with.
But there is a problem with the way the exchanges are now designed that have not yet received the attention they deserve, but I promise you’re going to be hearing a lot about it in the days to come. The technical term for it is risk corridors, and what it basically means is that companies who participate in an exchange or a marketplace in insurance are told that there is a reinsurance plan in place that will protect them in case of loss or catastrophic loss.
So, for example, let’s say you are an insurance provider and you go into a marketplace, and then it turns out that the demographics of the groups that signed up for your plans didn’t turn out the right way or there was an enormous spike in health care costs, whatever it may be, and you suffered dramatic losses, a risk corridor is in place to protect you from that. The reason why, is number one, it’s a safety net, per se, for the industry on a short-term basis. And the reason why that’s important is because you want patients’ bills to be paid and you don’t want people to go unable to see their bills paid and providers to be left out.
The problem is that applying that to the health care exchange is going to prove extraordinarily problematic. Because what’s happened over the last few weeks, as we predicted would happen, is that not enough young people are signing up for the exchange. In order for health insurance to work, you have to have enough younger and healthier people on it. If you have a health insurance plan that’s largely composed of people that are guaranteed to get sick, economically it doesn’t work, and there is no dispute about that. In fact, by the administration’s own statistics, they say that at least 38% of the enrollees in the exchanges had to be under the age of 34 in order for the exchanges to work in an actuarially sound way. So based on the assumption that that’s what was going to happen, insurance companies bid on these exchanges, and offered a product, and have begun to sign people up.
The problem is that so far that figure is not being met. The numbers are just starting to come in, we don’t know the full picture yet, but the trends are troubling. Number one, is not enough people are signing up. The target goal is a total of about seven million people or more by a deadline that has now been extended to March 31. The number is less than 2.2 million.
Now there’s still eight weeks left or so, so we’ll see what happens, but the trends are not positive. Here’s an even more troubling trend. Only 30% of national enrollees are from that demographic that I described to you. Only 30% are under the age of 34. In Florida, it’s only 25%. Here’s the fundamental problem that we have right now with the exchanges, beyond all the other ones that we have already discussed ad nauseam: Not enough people are signing up and not enough people under the age of 34 are signing up.
The result is that the way this is trending now, the exchanges are becoming more like a high-risk pool, and less like a true competitive exchange. And here’s why that’s problematic: If companies lose money as they are going to, if you look at these figures, and as the companies themselves anticipate, in fact, in some of the early disclosures these companies are making, you’re starting to see the forecast of losses. When these companies, if these trends continue, lose money because not enough people under the age of 34 signed up for them and not enough people signed up, under the law, under ObamaCare, they will be entitled to a payout from the high-risk pool. And this is a program that’s in place for the first three years of these exchanges.
And what that means is a taxpayer-funded bailout of ObamaCare. That means the taxpayers of the United States, your money, is going to go from your pocket into the pocket of these private companies. Now, what the private companies will tell you is, ‘Look, we bid on this product when you told us the rules were going to be this, but since then, you have changed those rules even more.’ And so what was already bad has gotten worse. And there is not enough awareness about this, but we’re going to be hearing about it in the weeks to come.
As we get closer to the reality that billions of dollars in taxpayer money is going to be used to bail out these exchanges, there is going to be growing outrage around the country, and people are going to want answers, and I hope my colleagues are starting to think about what we need to do. That’s why I filed the bill in November. It’s called the ObamaCare Taxpayer Bailout Prevention Act, and what it would do is it would eliminate this provision that allows for the tax-funded bailouts of these exchanges.
And this problem, as we get closer to it, the numbers are as bad or worse than we anticipated. So in the months to come, here is what you can expect to see: First, you can expect to see that companies are now going to say, ‘Well, we need our money. Under the law, we were promised this high-risk, this bailout. We signed up for it under that assumption. Now we need taxpayer money.’
And I predict the second thing you’re going to see is, going into next year, as companies begin to prepare their filings for next year, some companies are going to decide we’re not participating in ObamaCare exchanges next year at all, which means there is going to be less choices and less competition, and therefore higher premiums. Other companies are going to say we’ll participate, but only at these premiums, and they’re going to be significantly higher than the ones we’ve seen this year. Meaning it will be even less affordable; meaning even less people under the age of 34 will sign up; meaning even more money will have to go from the taxpayer to bailout the exchange.
Now, we’re still in mid-January and these numbers could change, but nobody realistically expects them to. In fact, I have yet to hear from anyone knowledgeable about this subject who has said to me, ‘Oh, don’t worry, in the next eight weeks, another five million or six million people will sign up and we’re going to get to over 30% of national enrollees, we’re going to get to over 38% of the people signing up being in the demographic of 34 or under.’
So it’s only mid-January, but I come to the floor today to sound the alarm that this is coming, so that people across this country know that we are on the verge, we are weeks and months away from transferring potentially billions of dollars from taxpayers to private companies to bail out these exchanges. And I promise you this will not be the last time you hear about this. And I encourage my colleagues as they go home on this recess and talk to people, get informed about this subject because you’re going to be hearing a lot about it in the weeks and months to come.
This is a very serious threat to the law itself, by the way. This is unsustainable. At a time when we have a $17 trillion debt, when so many Americans are struggling to find employment that pays them enough to live off, when so many Americans have seen the jobs they once had disappear and cannot find a job to replace it, when so many Americans are struggling with the growing cost of living in every aspect of their lives, childcare, student loans, utility bills, you name it. To be told that at a time when all of these challenges are happening in the personal economy of so many people, that billions of dollars of taxpayer money is going to go to bail out this law, there is going to be collective outrage across the political spectrum in this country, and rightfully so.
And here is the last point I would make, and then I’ll close. If this law has to be bailed out, it’s one more reason why it doesn’t work. These exchanges were supposed to be private, competitive marketplaces where companies could actuarially and soundly price a product and sell it at an affordable rate. That is not where they are headed. We are headed towards a day, soon, as early as next year, and you will see the filings this year, when these companies are going to decide either not to participate or to participate but only if they can charge substantially higher premiums, with higher co-payments, and higher deductibles. And on top of it, the only way they’ll participate is if they are promised this bailout.
We are going to hear a lot about this in the weeks to come, and I encourage my colleagues, irrespective of how you feel about this law, I cannot imagine any of us believing that we are at a time in our nation’s history, given the challenges we face now, where we should be bailing out this plan with taxpayer money being transferred to private companies to keep them in business. But that’s where we’re headed, and we better be able to do something about it soon because people are not going to stand for it.