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From Colorado 6th District Congressman Mike Coffman's website.

Coffman Introduces Bill to Prevent Insurance Industry Bailout
Jan 7, 2014  Press Release
Repeals Provisions in Obamacare to Cover Insurance Industry Losses
(Washington, D.C.) U.S. Representative Mike Coffman (R-CO) announced today that he has introduced legislation that will amend the Affordable Care Act, better known as Obamacare, to prohibit a potential bailout for the insurance industry that is currently authorized under Section 1341 and Section 1342 of the Affordable Care Act.

“The American people have had enough of big bailouts for big business and it’s time for this culture of corporate cronyism that has become a dominant part of Washington, D.C. to stop,” said Coffman.

Coffman’s legislation, the No Bailouts for Insurance Industry Act of 2014, would amend the Affordable Care Act to repeal Section 1341, the “reinsurance” fund, and Section 1342, the “risk corridor” provision.  Together, both could provide for a massive taxpayer bailout to cover the losses of a large insurance company.  Coffman is concerned that Obamacare is based on signing up a sufficient number of younger, healthier people for insurance through the exchanges - at a much higher premium cost - in order to shift the cost away from an older population that is expected to sign up for health insurance through the exchanges.  If the young don’t sign up in sufficient number, and Coffman doesn’t think they will, then he sees the cost of Obamacare spiraling out of control and the insurance industry suffering significant losses.

“The taxpayers should not be on the hook for the failures of Obamacare.  Any reasonable person can see that this scheme isn’t going to work and Americans should not be forced to bail it out once it fails,” said Coffman.

I would note that Coffman is in one of the top ten most vulnerable races for 2014, will likely face formidable candidate Andrew Romanoff, that the 6th CD is now much more competetive, and that House leadership has very likely allowed Coffman to be the standard-bearer of this bill to strengthen his candidacy.

This follows the January 2, 2014 Charles Krauthammer Washington Post editorial entitled Stop the Bailout Now.

Consider that the health insurance companies are probably less popular than the big banks, and that all Democratic Representatives and Senators will be faced with a difficult choice over this "bailout" decision. This one could pass the Senate if Harry Reid allows a vote. I would predict an Obama veto if it passes.

This issue could paint the for-profit health insurance companies an even darker shade of black.

The ACA is concurrently adding millions of newly insureds while the above legislation grinds through the process. The only reasonable alternative to any ensuing "death spiral" of hugely increased premiums without a "bailout" fallback would be a public option, then hopefully leading eventually to single-payer.

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Comment Preferences

  •  So, shouldn't we welcome a no-bailout bill? (2+ / 0-)
    Recommended by:
    skepticalcitizen, Stude Dude

    Not that we would let them crash anyway, in the event that this scenario transpires.
    I guess it's better to have a worst-case scenario mechanism in place than ad hoc when the crisis is upon us.
    But I'd like to see the insurance companies edged out of the Healthcare business by a public sector system and if it means buying them out as they crash......

    If I ran this circus, things would be DIFFERENT!

    by CwV on Wed Jan 08, 2014 at 09:24:49 AM PST

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