Right-Wing Media Falsely Claim ACA Creates Taxpayer-Funded Bailout

››› ››› JUSTIN BERRIER

Right-wing media have attempted to manufacture outrage against the Affordable Care Act by promoting the misleading claim that the health care law includes a taxpayer-funded bailout for health insurance companies. In fact, the provision, known as reinsurance, is funded by the insurance companies themselves, not taxpayer money.

Right-Wing Media Manufacture Taxpayer-Funded Insurance Company Bailout

Fox's Gretchen Carlson On "Insurance Bailout": "Guess What? It's Already In The Bill." On Fox News' The Real Story, host Gretchen Carlson claimed a provision in the Affordable Care Act would have "the government bailing out insurance companies once costs run over a certain amount" and that "taxpayers could be forced to pick up the tab yet again." [Fox News, The Real Story with Gretchen Carlson, 1/13/14]

Weekly Standard: "Private Insurance Companies Pay For Costs Below $45,000, Then Taxpayers Generously Pick Up The Tab." Weekly Standard post claimed that insurance companies "won't bear the cost of their own losses--at least not more than about a quarter of them.  The other three-quarters will be borne by American taxpayers":

Obamacare contains a "Reinsurance Program that caps big claim costs for insurers (individual plans only)."  He writes that "in 2014, 80% of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example." 

In other words, insurance purchased through Obamacare's government-run exchanges isn't even full-fledged private insurance; rather, it's a sort of private-public hybrid.  Private insurance companies pay for costs below $45,000, then taxpayers generously pick up the tab--a tab that their president hasn't ever bothered to tell them he has opened up on their behalf--for four-fifths of the next $200,000-plus worth of costs. [The Weekly Standard1/13/14]

Reinsurance Plan Created By The ACA Is Funded By Insurance Companies, Not Taxpayers

Wash. Post's Wonkblog: Reinsurance Program Is Funded By Insurance Company Contributions. An October 15, 2013 post on the Washington Post's Wonkblog explained that the funds for the reinsurance program are distributed by the government, but are paid by all insurance companies, not taxpayers:

Nearly all health insurance plans are required to pay into the reinsurance plan, even big employer plans that don't sell on the new marketplaces. For each subscriber, the health plans are charged $63 per enrollee annually or $5.25 per member per month. This is why the reinsurance program wasn't especially popular with health plans that focus on the group market, who wouldn't see much in the way of benefit from this program. [The Washington Post, Wonkblog, 10/15/13]

Slate: Reinsurance Is "A Tax On Insurance Companies That Pays For A Subsidy To Insurance Companies." In an October 14, 2013, Slate post, Matthew Yglesias explained that the reinsurance fee is a "tax on insurance companies that pays for a subsidy to insurance companies":

The underlying issue is that the framers of the Affordable Care Act were concerned that in its early years the ACA exchanges would disproportionately attract older and less healthy applicants. To help ensure that the program got off the ground, it includes federally funded "reinsurance" for health care plans in the exchanges. To avoid turning that into a net subsidy to the insurance industry, the reinsurance is funded by an industry-wide levy on work-provided insurance plans. It'll be $12 billion in 2014, ratcheting down to $8 billion in 2015, and $5 billion in 2016. [Slate, Moneybox, 10/14/13]

Jost: Reinsurance Plan "Will Assess Charges Against Health Insurers And Third Party Administrators Of Group Health Plans." In a July 13, 2011, post in Health Affairs, health care policy expert Timothy Jost explained that the program "will assess charges against health insurers and third party administrators of group health plans and pay out funds collected to non-grandfathered individual health plans to cover high-risk individuals":

Reinsurance. The reinsurance program will be operated primarily by the states beginning in 2014 and ending in 2016. It will assess charges against health insurers and third party administrators of group health plans and pay out funds collected to non-grandfathered individual health plans to cover high-risk individuals. The exchanges will initially be inundated by individuals with high-cost conditions who were formerly uninsured or covered through the state or federal high-risk pools, and the reinsurance program will stabilize their coverage until the exchanges can pick up a substantial number of healthy enrollees. Each state that runs an exchange must run a reinsurance program, while states that elect not to run an exchange can either operate the reinsurance program or cede the task to the federal government. States will enter into contracts with nonprofit reinsurance entities to operate these programs. [Health Affairs7/13/11]

Posted In
Taxes, Health Care, Health Care Reform
Network/Outlet
Fox News Channel, The Weekly Standard
Person
Gretchen Carlson
Show/Publication
The Real Story with Gretchen Carlson
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