Rubio: "The bottom line is that it is not right to allow a powerful industry to use its influence here in Washington to protect itself from the consequences of ObamaCare. And it is not right that hard working Americans are forced to pay for it."
U.S. Senator Marco Rubio
“ObamaCare: Why the Need for an Insurance Company Bailout?”
House Oversight and Government Reform Committee Hearing
February 5, 2014
Thank you, Chairman Issa and Ranking Member Cummings for holding this hearing and for inviting me here today. I’m a frequent watcher and loyal viewer of this committee on CSPAN so I appreciate the invitation to be here with you today.
The focus of my remarks this morning is going to be on Section 1342 of ObamaCare which I, in partnership with your colleague, Tim Griffin of Arkansas, have introduced legislation to repeal.
Now, Section 1342 deals with what has already been described as risk corridors. Now, under normal circumstances, risk corridors are a valid program, they provide insurers insurance against unanticipated major losses caused by anomalies that may occur in a competitive insurance market. This prevents disruptions in services, for example, for patients and for customers. And if they are budget-neutral, by the way, these risk corridors can actually protect taxpayers from assuming too much of the risk.
The problem with a risk corridor in ObamaCare is that this is not a normal circumstance. First of all, its failures are not anomalies; they are across-the-board. It’s not one or two companies that are not miscalculating on ObamaCare’s long-term prospects; it’s the entire industry that’s being affected by its failures. And, by the way, Obamacare and its exchanges are not a true competitive insurance market; in fact, it has increasingly become more like a high risk pool.
The risk of a bailout has always been high. As many of us predicted, these exchanges have not attracted enough young and healthy people to sign up. But the chances of the bailout have increased significantly in the last few months, due to several unilateral actions taken by the President and by his Administration.
For example, this past November, in response to the public backlash from people who were losing their health plans and providers, President Obama delivered a speech in which he announced his unilateral action to quote, “fix” his broken promise that “if you like your plan, you could keep your plan.”
That same day, however, the Department of Health and Human Services issued a press release to go with the President’s speech. In that press release they added a critical detail that was missing in the President’s remarks.
And here is what the press release said, quote, “Though this transitional policy was not anticipated by health insurance issuers when rate setting for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue.”
Now, what this means is pretty straightforward: the rates being charged by the insurance companies in the exchanges were based on a certain number young and healthy people signing up. But because that isn’t happening, companies in the exchange will not be able to offset the costs of insuring older and less healthy individuals. And as a result, the risk corridor will be needed to bailout the companies for their losses.
Now, the administration and the laws’ supporters deny that this is where we are headed. But the proof already exists that a bailout will be required.
For example, earlier this year, health insurance companies had to file their key disclosure documents with the Securities and Exchange Commission in it they had to explain to their shareholders what ObamaCare will mean for their bottom line in the coming year. And here is what it said, it will mean losses. That is why, based on these filings, the credit rating agency Moody’s has downgraded the outlook for American health insurers to “negative” status.
So health insurers are leveling with their shareholders about how ObamaCare’s failures will affect their bottom lines, and credit rating agencies are leveling with investors about how ObamaCare’s failures affect the health insurance industry.
Now it is time for President Obama, for Secretary Sebelius and for ObamaCare’s supporters to level with taxpayers about the fact their hard earned tax dollars will soon be needed to bail out the ObamaCare exchanges.
The supporters of ObamaCare have defended the risk corridors by citing how it has worked for Medicare Part D. But these are two fundamentally different programs.
Medicare Part D deals with defined, a limited and predictable population of seniors. Insurers knew who was going to sign up and they had a pretty good idea of how much they were going to cost to insure. And so, they could price for it accordingly.
But ObamaCare exchanges deal with an open-ended, broad and unpredictable group of enrollees. No one knew who was going to sign up, how many would sign up and how much they would cost.
But what they are now finding out is that the pool of enrollees that is signing up is smaller, older and unfortunately sicker than what they priced for. And soon, they will be coming to Washington for their bailout to cover their losses as a result.
Now, the law has a host of other problems. For example, as the Chairman has already pointed out, just yesterday, the Congressional Budget Office found that ObamaCare will cost millions of Americans their jobs and will add trillions in additional deficits. That, by the way, is why a growing number of Americans have come to realize this law has so many flaws that it cannot be fixed.
Now I respect the fact that there are still some who hold out hope that ObamaCare will work, just like there were some in Denver this Sunday still holding out hope that the Broncos could come back and win in the fourth quarter.
But no matter how you may feel about the law, we should all be able to agree that the American people should not have to pay for another taxpayer-funded bailout.
Refusing to take that possibility off the table is like basically telling the American people that some are so devoted to protecting ObamaCare, that they do not care how much it costs taxpayers.
The bottom line is that it is not right to allow a powerful industry to use its influence here in Washington to protect itself from the consequences of ObamaCare.
And it is not right that hard working Americans are forced to pay for it.