Today's Wall Street Journal commentary "Take the Palestinians' 'No' for an Answer" offers the choice…
CFIF on Twitter CFIF on YouTube
Quote of the Day: Trump Beats the "Experts" Again

Today's Wall Street Journal commentary "Take the Palestinians' 'No' for an Answer" offers the choice quote of the day today, highlighting the way in which President Trump's decision to finally (and rightfully) relocate the U.S. embassy in Israel to Jerusalem has once again proved him more prescient than the foreign policy "experts" who predicted dire consequences:

. This week's U.S.-led Peace to Prosperity conference in Bahrain on the Palestinian economy will likely be attended by seven Arab states - a clear rebuke to foreign-policy experts who said that recognizing Jerusalem as Israel's capital and the Golan Heights as Israeli territory would alienate the Arab world."

. The piece also highlights how the Palestinians stand alone among nations who somehow claim entitlement…[more]

June 24, 2019 • 01:32 pm

Liberty Update

CFIFs latest news, commentary and alerts delivered to your inbox.
Jester's CourtroomLegal tales stranger than stranger than fiction: Ridiculous and sometimes funny lawsuits plaguing our courts.
How ObamaCare’s Insurance Bailouts Add Up to Crony Capitalism Print
By Ashton Ellis
Wednesday, January 29 2014
The reason for all this convoluted money funneling is to entice health insurance companies to participate in ObamaCare long enough for the law to become entrenched.

Looking back on the first four months of ObamaCare – an error-prone rollout for Healthcare.gov, adverse selection in state-run risk pools and a last-minute rule change by federal regulators to allow consumers to keep non-complying plans – it’s a wonder that the health insurance industry ever signed off on ObamaCare in the first place. 

But not if you know how well insurance companies insulated themselves from financial ruin by passing the buck to taxpayers.

Now, with it looking like enrollments in ObamaCare’s government-run exchanges will tilt heavily toward high-cost subscribers, insurance companies in the individual market are poised to reap the rewards of several little known programs designed to bail them out. Each protects participating insurance companies from losing money, so that the Obama administration can claim credit for success that isn’t merited.

Here’s how the coming ObamaCare bailout will work:

  1. Risk Adjustment – This is essentially a wealth transfer among all health insurance companies, whether inside or outside the exchanges. One of the big fears prior to ObamaCare was that the rules required to participate – such as guaranteed issue and no pricing based on preexisting conditions, age or lifestyle – would lead to adverse selection: too many old and sick people buying insurance without enough young and healthy people to pay for them. ObamaCare’s risk adjustment provision minimizes this financially disastrous result by forcibly transferring money from plans with healthier populations to those with sicker ones.

  2. Reinsurance – This is also a wealth transfer. In effect, this program shields insurance companies in the individual market from having to pay the real cost for covering their subscribers. This program amounts to an implied admission by the Obama administration that, as implemented, ObamaCare – even after “risk adjustment” – is not a financially sustainable business model for private insurance companies.

  3. Risk Corridors – Whereas reinsurance subsidizes the costs of coverage, risk corridors subsidize the losses. If the actual cost of insuring subscribers exceeds 3 percent of what the insurer expected, federal taxpayers reimburse 50 percent of the losses. If the actual cost exceeds 8 percent of what the insurer expected, federal taxpayers pick up 80 percent. (The reverse is true for profits.) Overall, the idea is to use these backdoor bailouts as a way to convince participating insurance companies not to raise premiums for the next few years, as they otherwise would if the price of the plan had to pay for the actual cost of coverage.

  4. Individual Mandate – Supporters of the ‘3Rs’ as they are known in the health insurance industry dismiss criticism by noting that two of the three – reinsurance and risk corridors – will phase out in 2016. But what they don’t say is why. Only in 2016 will the penalty for not complying with ObamaCare’s individual mandate reach its full height, going from the greater of $95 or 1 percent of taxable income in 2014 to the greater of $695 or 2.5 percent of taxable income in 2016. Of course, by 2016 the individual health insurance market outside of ObamaCare will be effectively dead since federal subsidies cannot be used to pay for plans bought outside the exchanges. There is also the probability that millions of workers currently covered by their employer will be forced onto an ObamaCare exchange as the one-year delay of the employer mandate sunsets in October 2014. So while it’s true that reinsurance and risk corridors are only temporary bailouts, it’s only because they will be quickly replaced by a more permanent wealth redistribution scheme underwritten by taxpayers. 

The reason for all this convoluted money funneling is to entice health insurance companies to participate in ObamaCare long enough for the law to become entrenched. By guaranteeing to minimize the costs and losses associated with the law, the Obama administration has bought the insurance industry’s silence in the form of stable premiums (at least for now).

In the end, however, ObamaCare’s participating insurance companies look destined for disappointment. It is no coincidence that the subsidies stop flowing during the last year of President Barack Obama’s term in office. When that happens, expect insurers to discover that their sweetheart deal will expire, and they’ll be left to bear much more of the costs and losses ObamaCare imposes.

After all, that’s the price to pay once the cronies leave office.

Question of the Week   
In which of the following years did the U.S. Census Bureau start using standardized questionnaires for the decennial census?
More Questions
Quote of the Day   
 
"In a weird twist on socialism, Bernie Sanders on Monday rolled out a plan to hand a $1.6 trillion gift to college-loan borrowers -- who tend to be better off than the average taxpayer.He'd cancel all student debt, public and private -- even for grad students and no matter the borrower's income. Another $600 billion would go to make public universities and community colleges free.Sanders claims a…[more]
 
 
—New York Post Editorial Board
— New York Post Editorial Board
 
Liberty Poll   

In response to the escalating series of provocations by Iran, do you believe Pres. Trump's measured response, including positioning of military assets and documenting Iran's actions to allies, is better policy than immediate retaliatory strikes?