Sen. Marco Rubio likes to brag that he is the mastermind behind the Republicans' one successful attack on the Affordable Care Act -- that he stopped a "bailout" of private insurance companies and, in the process, saved taxpayers $2.5 billion.
The boast has some truth. What the GOP presidential candidate doesn't mention is that, because of his efforts, some people are likely to face higher premiums for their health coverage and insurance markets on the whole are less stable.
Nor does Rubio mention that just last year he supported using taxpayer funds to prop up another insurance program -- through an arrangement that more closely resembles a bailout than anything in the Affordable Care Act.
The object of Rubio's ire is the law's "risk corridor" program. Its purpose is to smooth the transition from the old, unreformed insurance market to a world in which carriers must provide insurance to anybody, regardless of pre-existing conditions, and in which they cannot vary premiums based on likely medical risk.
The officials and lawmakers who actually wrote the Affordable Care Act understood that, initially, insurers wouldn't know how to set their new premiums and design their new packages. The data collected before the health care law took effect simply couldn't provide enough information about who would actually sign up for coverage in the new market -- or what kind of policies they'd want. Insurers might guess wrong, charge too much and make extra profits. Or they might guess wrong, charge too little and incur extra losses.
The idea of risk corridors is to protect both the insurers and the taxpayers. Insurers who made those extra profits would pay into the system, while insurers who saw unexpected losses would get money back.
The hope was that the program would turn out to be roughly revenue-neutral, with the money coming in covering the money going out. It didn't work out that way.
On the whole, insurers expected a mix of customers with a relatively higher proportion of healthier people than those who did sign up -- a legitimate problem, but one the risk corridors were designed to address. Following the first year of coverage in 2014, insurers put in claims to the risk corridor program worth a net $2.5 billion. (To be more precise, claims to obtain money from the program equaled $2.9 billion, while insurers' payments into the system came to $362 million.)
By then, however, Rubio and other conservatives had already started attacking the program as a bailout -- not just of the health insurance industry, but of Obamacare itself. Administration officials tried to dodge those attacks by stipulating that the program would be "budget neutral" without specifying how, precisely, the Department of Health and Human Services would accomplish that.
Unsatisfied, Rubio called upon Congress to block HHS from shuffling funds within the department budget. Late last year, he succeeded in passing such an amendment to a big government spending bill. Under its terms, HHS in 2015 could make payments only with the money coming into the risk corridor program from other insurers. The prohibition does not apply for 2016, which is why the issue is coming up now on Capitol Hill, with conservatives making the same demands to block funding. Chances are good they will succeed.
Insurers understood the implications of Rubio's victory better, and earlier, than just about anybody else. They knew it would mean that the federal government couldn't make the promised payments. Sure enough, the administration announced a few months ago that HHS would be paying just 13 percent of the money that insurers had expected, because that's all the money it had at its disposal.
Large insurers, like Blue Cross plans, have the customers and cash reserves to absorb those losses pretty easily. It's a different story for smaller insurers who had counted on that money. The loss of risk corridor money is one reason, and maybe a big reason, that a dozen small cooperative insurers have shut down in the last few months. Going forward, some insurers are bound to charge higher premiums, at least for the next year or two, because they can't count on risk corridor money -- although we don't know how significant the premium increases will be or how many people they will affect.
Rubio claims that his victory has weakened Obamacare and it has, albeit incrementally. But the basic conceit of the Florida senator's claim -- that he's stopped a bailout, the kind most Americans associate with the Wall Street or auto industry rescues -- doesn't hold up to even casual scrutiny.
This wasn't a case of corporations acting irresponsibly and then, after incurring hundreds of billions of dollars in losses, demanding that taxpayers rescue them. This was business and government agreeing in advance to share in either profits or losses, in order to help along a fledgling insurance market.
Politifact has rated Rubio's claim as "mostly false." Even some conservatives, like Scott Gottlieb, a resident fellow at the American Enterprise Institute, have said that calling the risk corridors a bailout is wrong. The numbers also put Rubio's boast into perspective, since $2.5 billion is tiny given the size of Obamacare -- and the health care law is, by all accounts, costing significantly less than even its promoters expected.
Rubio and his allies might argue that they oppose risk corridors on sheer principle, that government simply has no business insulating insurers from losses (or sharing in their profits). But if that's the case, the Affordable Care Act shouldn't be the only government insurance program on their target lists. Medicare Part D should be too.
Part D, which a Republican Congress designed and a Republican president signed into law in 2003, provides prescription drug benefits to seniors and the disabled through private insurance companies. It has a risk corridor program that operates almost exactly like the one in the Affordable Care Act. The only substantive difference is that Part D's program is permanent. Yet neither Rubio nor any other conservative is yelling about that.
But, then, Rubio's definition of a "bailout" seems to change a great deal depending upon the circumstances. Early in 2014, the federal flood insurance program came up short on funds and needed an infusion of dollars. Without the extra money, flood insurance premiums would have risen sharply and real estate markets could have taken a hit. The problems would have been particularly severe in Florida, with its low-lying land and vulnerability to hurricanes. Rubio hemmed and hawed a bit, called for long-term changes to the program, but ultimately voted for the infusion of money because it would spare his constituents the financial burden.
That's a fair position for an elected official, even a conservative one, to take. But Rubio seems to think the same calculus doesn't apply when there's an opportunity to score political points against President Barack Obama and his health care law.
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