×

The latest sneaky attempt at an Obamacare bailout

A person walks into the UniVista Insurance company office where people are signing up for health care plans under the Affordable Care Act, also known as Obamacare, in Miami, Florida.
Getty Images
A person walks into the UniVista Insurance company office where people are signing up for health care plans under the Affordable Care Act, also known as Obamacare, in Miami, Florida.

Not many phrases can cause as much bipartisan fury as much as the words "Obamacare insurer bailout."

But get ready to hear plenty of anger and consternation from the progressive Left and the anti-Affordable Care Act Right thanks to a new report that says the White House is preparing to use an obscure fund to do an end run around Congress and pay off health care insurance companies that have suffered major Obamacare-related losses.

The Washington Post reported Friday that the Obama administration wants to use the little-known Treasury Department's Judgment Fund to pay off the insurers who lost money because ACA enrollments continue to be laden with older and sicker enrollees who are costing them too much to cover. No one in the White House will call it a "bailout," but if this plan goes through, that's exactly what it will be. The total payout could be in the billions of dollars, as a total of 175 insurers are due compensation from a $2.5 billion shortfall in 2014 and an as-yet unpublished amount from 2015.

All of this mess is a result of three very crucial broken promises. The first promise was one the health insurers bought from the Obama administration, and as such, perhaps it's poetic justice that they're now paying for their gullibility and naiveté. But they believed the White House when it said the fines imposed on people not signing up for approved health insurance plans would surely lure enough young and healthy Americans to sign up for those plans to avoid those penalties. But it turned out that promise didn't materialize, and overall enrollment is still less than 50 percent of the projected total of 24 million people this year.

The reasons for the enrollment flop, especially among the young, is simple: It costs too much when you factor in the high deductibles. And relying on people who never showed enough responsibility to sign up for health insurance before to financially bolster an insurance system for millions of older and sicker people is like asking the average American teenager to pick up the check for the whole family at a fancy restaurant. Perhaps it was political pressure and not just a financial miscalculation that forced the insurers to buy this ridiculous premise, but they did either way.

The second broken promise was one the Obama team made to the insurers. They told all of them that if the healthy new enrollees' premiums didn't exceed the costs of any one of the insurers having to take on older and sicker customers, the companies that were doing better and clearing a profit would pay into a fund to make the less lucky insurers red ink go away. Well, that didn't happen either as there simply haven't been enough profits to go around. Some of the ACA-participating made some financial gains, but not nearly enough to cover the losses suffered by those 175 companies in 2014 alone. So much for "sharing the wealth."

But the Obama administration's extreme efforts to help the health insurers and keep bad Obamacare publicity and massive ACA exchange collapses from exploding all over the front pages resulted in a third broken promise. The White House told the money-losing companies they would still get their money back, this time from the taxpayer funded budget of the Department of Health and Human Services. But Republicans in Congress, led by Senator Marco Rubio and then-House Speaker John Boehner passed a bill in late 2015 blocking that bailout plan, too.

And so, that's what's led us to this latest gambit. To be clear, the administration is clearly hoping it will be able to get away with tapping into a Treasury Department fund to make up for a blocked Health and Human Services payoff that was meant to make up for a failed shared-the-wealth risk-pool fund that was meant to make up for a shortfall in enrollees into a poorly planned and executed national health insurance plan. Got that?

Obamacare hasn't even been in effect for four years and it's already failing faster and more severely than even some of the most conservative and sober critics predicted it would. What's disturbing is seeing the lengths this administration will go to in order to plug the multiple holes in the ACA dike.

Make no mistake, if Congress or the courts somehow block this latest attempt to use the Treasury money, the Obama team will try something else. It seems there's no amount of taxpayer money or no government agency it isn't willing to use to avoid having to admit failure and at least tear up the ACA and try again.

It's not as if we didn't already know this, but Obamacare is another example of government for the politicians, by the politicians, and certainly not for the taxpaying people.


Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.