NTU Supports "Obamacare Taxpayer Bailout Prevention Act" (S. 1726/H.R. 3541)

The Honorable Marco Rubio
United States Senate
317 Hart Senate Office Building
Washington, DC 20510
The Honorable Tim Griffin
United States House of Representatives
1232 Longworth House Office Building
Washington, DC 20515

Dear Senator Rubio and Congressman Griffin:

On behalf of the 362,000-member National Taxpayers Union (NTU), I write in support of the “Obamacare Taxpayer Bailout Prevention Act,” S. 1726 and H.R. 3541 in the Senate and House respectively. This legislation would repeal Section 1342 of the President’s health care law, ensuring that taxpayers aren’t on the hook for insurance company losses incurred in the implementation of the plan.

Section 1342 of the Patient Protection and Affordable Care Act (PPACA) creates “risk corridors” that constitute a tax on insurance plans in order to fund government interference in the marketplace. Intended to dissuade providers from picking and choosing the healthiest customers, insurers are required to pay Health and Human Services (HHS) when costs undershoot anticipated targets. In the event that costs exceed those targets, HHS will pay insurers as much as 80 percent of the overage. In essence, the risk corridors pay health insurers who miscalculate actuarial risk, exposing taxpayers to potentially high bills if and when health insurers have higher than expected costs in 2014-2016.

In light of the troubled roll-out of PPACA to date, and the recent back-peddling on the part of the Administration, it would be an understatement to suggest that cost projections for 2014 can’t be taken at face value. With the proclamation that customers can keep their current insurance plans and the difficulty individuals have had in enrolling in exchanges, the insurance marketplace is in a state of upheaval. Various delays and fixes, which suffer from flaws of their own, are confounding risk calculations for coming months and years. All the while, concerns are mounting that those who need comprehensive insurance plans the least will refrain from purchasing them, thereby driving up the over-all cost of plans for insurers.

On top of the potential liability to taxpayers posed by PPACA’s Section 1342, Politico.com reports that Administration officials have signaled in recent weeks they plan to “adjust special payment mechanisms built into Obamacare, called ‘risk corridors’” in order to provide additional assistance to insurance companies. Doing so, despite the very clearly defined parameters of the program, has the potential for even greater fiscal turmoil.

Taxpayers shouldn’t be forced to underwrite the game of carrots and sticks HHS employs to execute PPACA, especially given the uncertainty in the health insurance marketplace. NTU is pleased to endorse S. 1726 and H.R. 3541; we urge all Congressmen to support this legislation and work toward its swift enactment.

Nan Swift
Federal Affairs Manager