Valerie Jarrett Personally Soothed Nervous Insurers Who Were Asking For Obamacare Bailout
New documents reveals that top White House adviser Valerie Jarrett personally conducted damage control with nervous health insurance companies after those companies saw no other way to hold premiums down under Obamacare without a taxpayer-funded bailout.
Their pleas worked.
A month later, the Obama administration issued rules to allow for a taxpayer-funded insurer bailout.
Chet Burrell, president and CEO of Care First Blue Cross Blue Shield, wrote personally to Jarrett in March 2014 that insurers would need taxpayer funding from Obamacare’s risk corridor program in order to cut back on substantial losses, according to a House Oversight and Government Reform Committee report released Monday.
Burrell warned that companies may hike premiums by “20 percent or more” due to the Obama administration’s initial policy that the risk corridor program not be augmented with taxpayer dollars.
The risk corridor program was intended to pool payments from insurers and redistribute the funding to the companies that attracted the sickest and most costly influx of patients — leaving the companies that signed up the more profitable customers with the bill.
Jarrett initially protested that the administration had already promised insurers 80 percent of what they wanted in the first place, but eventually conceded that HHS’s “policy team is aggressively pursuing options.”
The next month, the Obama administration issued rules that would permit taxpayer funding to be doled out to insurers through the risk corridor program, which was originally supposed to be budget neutral.
The Obama administration’s assurances have gone far with insurance companies. Out of 15 companies surveyed by the committee, 12 expect to receive payouts from the risk corridor program. Just one expects to pay into the fund — the other two expect no net change.
Just including the 15 companies the Oversight Committee interviewed, taxpayers could be on the hook for $725 million in 2014. The report concluded that the changes to the program could cost taxpayers $1 billion by the end of the year.
Insurance companies have the Obama administration in a tight spot over the program. Without guarantees of a taxpayer bailout, insurers like Burrell were left with drastic premium hikes as their only remaining way of making up their losses.
Obamacare’s three risk mitigation measures are the most significant factor in keeping health-care premiums from soaring so far — although they’re already rising by double digits in many states.
Two of the provisions, risk corridors and reinsurance, are set to run out in 2016.
The University of Minnesota’s Stephen Parente projects that customers won’t see the full weight of Obamacare’s premium hikes until 2017, when the effect of the bailouts has run out. (RELATED: Top Health Economist Predicts Obamacare Will Ultimately Boost Number Of Uninsured)
In the meantime, the White House is trying to guard against a barrage of premium hikes that will be finalized in September, just weeks before midterm elections.
With some of the largest insurers threatening to up their rates “as much as 20 percent or more,” as Burrell warned, the Obama administration may have avoided an even tougher time in the midterms than had it not caved on the risk corridor program’s budget neutrality.
The Oversight report also found that senior White House advisers repeatedly wrote talking points for insurance companies during Obamacare’s rollout, displaying the administration’s always cozy relationship with big name insurance companies. (RELATED: GOP Senators Wary Of Insurer Admin Ties In Obamacare Implementation)