Risk Corridors and the Risk They Pose to Obamacare

Ever since Obamcare passed on March 23rd, 2010, Republicans have been up in arms, attempting to repeal the law through every possible avenue available to them. Whether for religious freedom, states rights, or government intrusion, Republicans found arguments to suit their real end: the repeal of President Obama’s signature achievement, and the resultant crippling blow to his Presidency and legacy.

First it was the the town hall meetings in the summer of 2010, in which many genuinely angry conservatives attended meetings with their congressman, and many out of town “conservative activists” took buses, paid for by big money interests, to be seen protesting at these meetings.

After that, there were the 2010 elections. In that year, Republicans swept to control of the house, gaining 63 seats, more than any party had gained in one election since 1948. Additionally, the Republicans gained six seats in the U.S. Senate, and 680 seats in state legislatures. Following the election, Republicans controlled 29 of the 50 Governor’s mansions in the United States. And yet, they still did not control the Senate, the Executive branch, and had the most tenuous of majorities on the Supreme Court. Politically, the 2010 elections resulted in stalemate, and Obamacare remained intact despite the best efforts of the organized right.

Not having the votes at the ballot box, conservatives turned to the courts, all over the country. All in all, 28 states would file suit against Obamcare. Most importantly, 26 states petitioned the Supreme Court in a challenge to, among other things, the law’s individual mandate, a policy so crucial to the plan that to invalidate it would have invalidated the entire law. The states summarized their legal argument that:

“Regulation of non-economic activity under the Commerce Clause is possible only through the Necessary and Proper Clause. The Necessary and Proper Clause confers supplemental authority only when the means adopted to accomplish an enumerated power are ‘appropriate’, are ‘plainly adapted to that end’, and are ‘consistent with the letter and spirit of the constitution.’ Requiring citizen-to-citizen subsidy or redistribution is contrary to the foundational assumptions of the constitutional compact.”

Many will remember, as the oral arguments in the case were being heard, the left became convinced that the law would be overturned, as longtime swing vote Anthony Kennedy’s line of questioning indicated that he would be voting against the law’s constitutionality. The right became equally assured as to the obvious overreach of the law.

Perhaps seeking to avoid injecting The Court directly into the center of another political controversy so soon after it decided the 2000 presidential election, though, Chief Justice John Roberts, the George W. Bush appointed conservative wunderkind of The Court, wrote a decision the upheld the individual mandate. At the same time, Roberts’ decision limited the Obama Administration’s ability to compel states to accept the law’s medicaid expansion. Thanks to the ruling, the individual mandate would stand, but states would be able to accept or reject the massive increase in Medicaid funding under Obamacare, 90% of which would come from the federal government.

The next step for obstinate state Governors, having failed to win enough votes at the ballot box, win their case in court, and already having curtailed the Act’s Medicaid expansion, was to refuse to set up Obamacare’s Health Exchanges. Under the law, each state would set up their own Health Exchanges, which were supposed to be like “Tavelocity.com for healthcare”. In other words, consumers would be able to go to one page, where they would compare the final price of different health insurance products, and choose the one that best suits their needs.

Only, most Republican Governors simply never set up their state insurance plans. Rather than look like they support Obamacare, and setting up their own state exchanges in the way that their state’s elected representatives saw fit, the majority of Governors in the U.S. let the Federal Government set up their exchanges for them, as was to happen in the law if states failed to set up their exchanges on time. This served to put a whole lot more pressure on the http://www.healthcare.gov website on launch day, but it did not actually cause one extra person in America to be without Obamacare subsidized insurance.

Now, having failed through the ballot box, in the courts, and through two different attempts at crippling the law through state Governors, Obamacare still lived, and Republicans were growing desperate. At the end of September 2013, a band of Republican Congressman and Senators, led by Senator Ted Cruz of Texas, caused the Government to shut down. All non-essential government programs, and all non-entitlement payment programs stopped for 17 days last October, and the electoral standing of everyone in Washington, but especially Republicans, took a major hit.

However, this is where the story gets interesting for the Democrats. Instead of folding like they usually do in these situations, Democrats remained unified behind President Obama’s pledge that he would NOT negotiate with the faith and credit of the United States Government. Republicans continued to try to press what they believed was their advantage in this “hostage” situation, but finally, with less than one day before the United States defaulted on its debt and sent the world into, at best, recession, Republicans buckled and voted 285-144 to end the shutdown and raise the debt limit, no strings attatched. With a Democratic controlled Senate and White House, the new budget was quickly signed, and Government was back open for business.

Well, it’s been about three months, and the Republicans have a new plan to cripple Obamacare. This time, they hope to be just sneaky enough to break Obamacare, while never directly calling for its repeal. Having tried to defeat the law in at least six other ways, Republicans have turned to trying to damage the law so badly that Americans, who do not want the law repealed, finally change their minds. Simply put, by concern trolling about “insurance company bailouts” in the ACA, the Republicans hope to cripple a key component of the law, causing premiums to skyrocket, and the public itself to demand Obamacare be repealed. Unfortunately for Republicans, though, their latest gambit is bound to fail because Democrats still refuse to negotiate over the debt limit, risking default is terrible politics in an election year, and Republicans are likely to take the blame if it were to happen, and finally because even Republicans, if they were committed to causing the U.S. to default, would not have the party discipline to commit such a politically suicidal act.

The Republican plan is this: tie the latest raise of the debt ceiling, something that absolutely, unequivocally, MUST be done, to the defunding of “risk corridors” in Obamacare. The hope among the caucus is that, with such a benign and obscure sounding issue in play, Democrats would quickly agree to the deal to avert another showdown over the debt limit.

Risk corridors, though, are an essential part of insurance plans all over the world. Here’s how they work: an insurance company collects a little bit of money from all of its customers, and puts that money into a “pool” for use at a later date. If the group of people that they finally insure ends up being more expensive than , because they are older, sicker, or just because of dumb luck, the company has a bit of extra cash to cushion the blow until it is able to get a more favorable mixture of consumers signed up for its plan.

What’s more, under Obamacare, these provisions are set to expire in 2016, only giving the insurance companies using the exchanges two years to make their pool of customers profitable. Even worse, though Republicans have spent the last month or so decrying the “insurance company bailouts” that they heroically uncovered for us, hidden deep within Obamacare, this is actually a normal part of national health insurance policy. For example, when Republicans passed Medicare Part D on January 1st, 2006, under George W. Bush, risk corridors were a part of the Republican-crafted bill! Lastly, even the non-partisan Congressional Budget Office officially debunked the idea that there are insurance company “bailouts” in Obamcare.

If the Republican plan works, and they are able to successfully tie raising the debt limit to the defunding of Obamacare’s risk corridors, this will cause premiums to shoot higher. Health insurance will become more expensive for almost every single person in America lucky enough to have it. The Republican Party’s hope, at this point, is that they would be able to tell the country that they “told us” Obamacare’s insurance premiums would spiral out of control, and demand its repeal right along with the American people. Only it would be a complete lie, because they would have been the ones to intentionally cause those premium hikes.

Take solace in this, though, my reader who has stuck with me this long. The sixth (at least) major attempt by to cripple or repeal Obamacare is destined to suffer the same fate as the first five.

First, as President Obama has made abundantly clear each and every time that Republicans have tried to take the full faith and credit of the United States hostage for policy concessions, he will not negotiate over the debt limit. The president can afford to do this because, as recent history shows, and very recent polling, Republicans will be the ones to take most of the blame if the U.S. were to default on its debts. In a recent CNN poll, respondents said they would blame Republicans in that eventuality by a margin of 59-24. That’s why, if the Republicans really were to bring us to the brink in order to give this long shot, back door plan a chance at toppling Obamacare, they would see how truly terrible politics this is in an election year. These terrible politics would cause some of their more liberal members, and those who have won election from bluer states, to cave at the last minute, just like the last time, and this latest Republican gambit will fail.


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