September 27, 2020

Bombshell Report Exposes Valerie Jarrett-Health Insurance Co. Bailout Scheme

New Congressional Bombshell Exposes Behind-the-Scenes Creation of Massive ObamaCare Bailout

Follows Leading Free-Market Group’s Confrontation of CEOs Who Stand to Profit from American Taxpayers

White House Senior Advisor Valerie Jarrett and Health Insurance Industry Worked in Tandem to Increase ObamaCare Law’s Taxpayer Bailout of Insurance Industry

National Center’s Free Enterprise Project Consistently Demanded that CEOs Refuse Taxpayer Money

Bailout of Insurance Industry Now Expected to Cost Taxpayers $1 Billion in 2014 Alone

Washington DC – A new blockbuster report issued by the U.S. House of Representatives Committee on Oversight and Government Reform confirms the importance of the National Center for Public Policy Research’s shareholder activism by exposing how senior White House officials coordinated with health insurance lobbyists and executives to dramatically alter and increase the potential for a massive taxpayer bailout of the insurance industry.

“We did not wait for this report. Earlier this year, we took the fight – on behalf of the American public – one-on-one to the CEOs of many of the major health insurance companies we already knew stood to take exorbitant bailouts at taxpayer expense. This is even more important now that Congress has found that the Obama White House and the insurance industry are upping the ante,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “When we confronted them, the CEOs of Aetna, Humana , Wellpoint and UnitedHealth all unapologetically said that their companies would take bailout money. Combined with the information exposed by Committee on Oversight and Government Reform report, it appears that the White House is more than happy to do the health insurance industry’s bidding and then some.”

As written, ObamaCare provides numerous means by which insurers can get funding to make up for losses caused by the law’s inherent weaknesses. One such mechanism is known as the “risk corridor.” The risk corridor essentially provided that insurers who made more on the exchanges had to pony-up a portion of its revenue to cover for insurers that found themselves in the red. The White House promised the risk corridor would be budget neutral. But, as ObamaCare started to unravel and the mix of Americans entering the exchanges posed tremendous risk for the insurance industry, the White House took potentially unconstitutional action by altering the risk corridor provisions to the benefit of insurers at the expense of the taxpayers.

The Committee report exposes just how closely President Obama’s Senior Advisor Valerie Jarrett worked with health insurance leaders – including executives and lobbyists from Humana, Aetna, Wellpoint, CareFirst, Health Net, Inc, Kaiser Permanente and many others – to increase this bailout:

Insurance companies and their chief trade group warned that a budget neutral Risk Corridor program would lead to large premium increases for exchange plans in 2015. Essentially, insurance companies presented the Administration with a choice: face significantly higher premium increases in 2015 for exchange plans or make taxpayers bail out insurance companies.

Documents show that Ms. Jarrett took the warnings of the insurance companies very seriously and indicated that the Administration had given insurers 80 percent of what they sought. Insurers were not satisfied with the Administration’s first change and lobbied for additional protection. In May 2014, the Administration delivered to insurers, modifying the risk corridor payment formula to increase the size of the bailout insurers could expect to receive.

“Congress has not appropriated the funds necessary to fuel this potentially unconstitutional bailout,” said Danhof. “Jarrett is on untenable legal ground when she claims authority to funnel American tax dollars to her friends in the insurance industry. Since congressional power is muted by difficulty in obtaining standing to sue the Administration, the National Center attacked the other half of this symbiotic equation – the health insurance executives that teamed up with the Obama White House to essentially rob taxpayers blind.”

“When National Center representatives confronted health insurance CEOs earlier this year, we did not expect them to immediately see the light and pledge to reject the bailout, but we had two primary reasons to ask anyway. First, we put the companies on the record as publicly stating they would willingly accept a taxpayer bailout. Secondly, the risk corridor provision are supposed to sunset at the end of 2016 – meaning so to should the bailout of the insurance industry – and we are working to ensure that remains so.”

But experts such as the National Center’s David Hogberg, Ph.D., have warned that, once the health insurance industry gets used to these taxpayer bailouts, they may continue in perpetuity:

If ObamaCare was everything the President and his team promised, perhaps the concern about perpetual bailouts would be unfounded. But that fairy tale died long ago,” added Danhof. “As this episode with the risk corridor provisions show, the White House seems more than willing to accede to health insurer demands. So, if the industry requests more changes to the law, perhaps even a total cancellation of the risk corridor sunset provision, evidence shows they would likely get their wish. And considering that the risk corridor may cost taxpayers $1 billion or more this year alone, pressure must be applied to corporations that profit from this regime.

“Only when the public outcry and reputational risk to these specific companies starts to outweigh the taxpayer bounty, will they likely retreat from these bailouts,” noted Danhof. “The National Center’s Free Enterprise Project will continue to hold their feet to the fire and look out for the interests of the American people.”

Danhof also wrote about this topic on the National Center’s website in a post titled, “National Center Activism Precedes Congressional Bailout Bombshell.”

The National Center’s Free Enterprise Project is the nation’s preeminent free-market corporate activist group. In 2013, Free Enterprise Project representatives participated in 33 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, media bias, gun rights and many more important public policy issues. This year, the National Center has participated in 50 shareholder meetings scoring many major victories for liberty and the free market.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, three percent from foundations, and three percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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Aetna Won’t Turn Down ObamaCare Bailout

Aetna Joins Other Health Insurance CEOs in Declining to Refuse a Taxpayer Bailout Under ObamaCare

Denver, CO/Washington DC – After quizzing from the National Center for Public Policy Research’s Justin Danhof, Aetna CEO Mark T. Bertolini on Friday joined other health insurance CEOs questioned by the National Center in refusing to pledge to reject a taxpayer bailout of his company should ObamaCare continue to fail to perform as advertised.

“When I asked Mr. Bertolini whether Aetna would reject any taxpayer money that may flow to the company through ObamaCare’s risk corridor provisions, he attempted to deflect the issue with a canned, wonky answer that talked about reinsurance provisions that had nothing to do with my question. However, in the end, his implication was clear that the company would of course take the money if it becomes available,” said Danhof. “It is a shame that an industry that lobbied for this monstrosity now has its major players poised to rip off the taxpayers – many of whom are seeing their premiums rise and choices decrease.”

Danhof continued: “I attempted to get Mr. Bertolini off of his prepared script by asking him a follow-up question about the company’s future lobbying. Since the risk corridor provisions are set to expire in three years, I asked if the company would pledge to not lobby for their extension at that time. Bertolini did not make that commitment. Instead he said his goal was to personally work to make sure that this feature of ObamaCare works better and that taxpayer funds aren’t needed to keep it viable,” said Danhof. “However, the easiest way to remove the taxpayers from the equation is to do what we asked and not take the money in the first place.”

A complete transcript of the exchange between Danhof and Mr. Bertolini is here; an audio recording of the exchange is here.

The National Center’s David Hogberg, Ph.D., commented further: “When Mr. Bertolini said, ‘Should the exchanges attract mostly sicker people, these tools are necessary to help prevent large spikes in premiums, which create large spikes in subsidies,’ Mr. Bertolini suggested that the exchange might attract mostly sicker people, but the evidence shows that’s not a hypothetical anymore. Gallup surveys show that exchange enrollees report their health to be worse than most Americans. Additionally Blue Cross Blue Shield of North Carolina said that the 18-34 age group in its exchange plans had more medical claims that usual. This suggests taxpayers are on the hook for a big bailout this year, and it’s unfortunate that Aetna wouldn’t forego it.”

“In theory Mr. Bertolini is correct: the ObamaCare risk corridors exist to limit premium hikes,” said Hogberg. “In practice it doesn’t seem to be working out that way. So far we’ve seen that Ohio is set for an average premium increase of 13 percent next year, while Virginia and Washington state are facing increases just under 9 percent. It’s a testament to how badly designed this law is that even with the added taxpayer money from risk corridors, policyholders are facing big premium hikes.”

Dr. Hogberg added: “We asked about the risk corridors, but Mr. Bertolini seemed to give us an answer about both those and the reinsurance part of ObamaCare. Those are two different things. Risk corridors limit the profits and losses while reinsurance provides protection for insurers who enroll a lot of high-risk individuals.”

Danhof and Hogberg both have attended health insurer shareholder meetings this year, including Wellpoint, Humana, and now Aetna to ask about bailouts. So far, every health insurance company CEO has said his company will take bailouts. National Center President David Ridenour is attending UnitedHealth’s shareholder meeting in Las Vegas today, June 2.
The National Center has also attended the shareholder meetings of all the major U.S. pharmaceutical companies this year, most recently, last week at Merck.

The National Center has attended 41 shareholder meetings so far in 2014 (8 of which are major health care companies) and 33 in 2013. It began attending shareholder meetings in 2007.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, three percent from foundations, and three percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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Taxpayers Should Plan for Health Insurance Company Bailouts

WellPoint CEO Suggests ObamaCare Exchanges Attract High-Risk Consumers

In Response to Question from National Center for Public Policy Research, WellPoint CEO Joseph Swedish Says Risk Corridors are Necessary to Protect Companies Like WellPoint from Possible ‘Significant Downside’ of ObamaCare Exchanges

Indianapolis, IN/Washington DC – Responding to a question about ObamaCare’s risk corridors at WellPoint’s shareholder meeting today, WellPoint CEO Joseph Swedish declined to promise that the health insurance industry giant will reject taxpayer bailouts. He also pointed out that very high-risk populations would sign up for the ObamaCare exchanges.

Swedish was responding to a question from David Hogberg, Ph.D. of the National Center for Public Policy Research, who asked, in part:

According to an analysis published in Forbes, “a closer analysis of the rate filing shows that Wellpoint is assuming in its proposed rates that its ObamaCare-compliant health plans will be very unprofitable for 2014, except for the anticipated recoveries from the reinsurance fund. Wellpoint’s projections for non-grandfathered plans includes expected reinsurance recoveries of 10.8% of premium.”

It seems that these less-than-rosy forecasts may mean the company could qualify for a taxpayer bailout through the Affordable Care Act’s risk corridor provisions….

If the situation arises in which WellPoint qualifies for taxpayer money through the risk corridor, can we get your promise that you will reject it?

Swedish replied:

With respect to risk corridors…risk corridor models are generally developed for offerings such as the Affordable Care Act in order to protect consumers, to create price stability in the marketplace, and finally to offer the opportunity to have products come to market. Generally, if you don’t have that kind of protection, many times organizations taking high risk like us may choose not to enter the market. So risk corridor models, quite frankly, are very effective and are well placed and well positioned in order to protect the consumer at the end of the day.

With respect to our situation, we certainly are mindful of the availability of those funds. I do want to underscore a little something you said to put a little correction to it. That is, we will not purposefully underprice a product to take a loss to then offer it in the marketplace to gain market share. I think that generally was a point you made. Because risk corridor payment simply doesn’t allow you to recover what you’ve lost dollar-for-dollar. We would never position ourselves to purposely take a loss.

With respect to the risk corridor itself, the payment, if it were available to us, I think it would be very appropriate for us to take that payment, recognizing it is not a dollar-for-dollar payback for the loss that we would incur. It is a very meaningful model that helps ameliorate some of the risk. By no means does it take care of all of the risk that we have to absorb and so if we do take a loss and a risk corridor payment were available to us, we would take advantage of that. It is a program that has a beginning and an end to it. And again it is set up to protect plans like ours from the significant downside that could occur because of very high-risk populations that take advantage of these new products in the marketplace. The next three years, we’ll see how it plays out. Hopefully we’ll get a chance to chat in the next couple of years. But my sense is that we’ll be able to take advantage of it, but our number one goal is to not put ourselves in the position of having to be the beneficiaries of risk corridor payments.

“While I’m disappointed that Mr. Swedish didn’t commit WellPoint to forgoing taxpayer funds, his answer was still very informative,” Hogberg said. “If risk corridors are necessary to protect against high-risk populations that are attracted to the ObamaCare exchanges, then he’s in effect underscoring what ObamaCare critics have contended for some time. The exchanges won’t attract a typical risk-pool; rather, they are going to attract people who are generally older and less healthy, a population that, risk corridor or not, will lead to a death spiral.”

“I also doubt that the risk corridor will have a beginning and an end,” Hogberg continued. “If the exchange risk pools prove unstable—that is, if the young and healthy people leave after 2014 and 2015 in the face of premium hikes—then insurers will likely be petitioning the Obama Administration to extend the risk corridors beyond three years.”

“Finally, I certainly hope WellPoint isn’t underpricing its products. Nevertheless, it is a little hard to believe that the risk corridors didn’t factor at all into its pricing decisions. As long as the risk corridors are in effect, insurers will be tempted to underprice their products in the knowledge that taxpayers will pick up some of their losses.”

David Hogberg’s full question, as prepared for delivery, is available here.

David Hogberg is one of the nation’s leading health care policy analysts, and a frequent media commentator on health care issues. So far in 2014, he has been a TV or radio guest or quoted in the press 210 times. Various publications by Dr. Hogberg are available here, and his March 11 testimony at the U.S. Senate on the problems with government-run health care systems can be viewed here.

David Hogberg appeared at the WellPoint meeting representing National Center President David Ridenour, a WellPoint shareholder.

The National Center’s Free Enterprise Project is a leading free-market corporate activist group. In 2013, Free Enterprise Project representatives attended 33 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, media bias, gun rights and many other important public policy issues. Today’s Wellpoint meeting was the National Center’s 33rd attendance at a shareholder meeting so far in 2014.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, three percent from foundations, and three percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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