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New tax, higher premiums planned to bailout health insurers

Healthcare premiums due to Obamacare are about to rise on every health care plan due to a bailout plan that is planned through a new tax levied on the insurance companies that will be passed on by increasing the premiums paid by consumers, whether consumers have Obamacare or not, to offset the costs and potential failures of insurance companies.

Forbes contributor, Dr. Scott Gottlieb said on Friday that it was not clear where the money to pay for these “risk adjustments” would come from in the first place.

“One scheme had the Obama Administration using money that it clawed away from profitable health plans to offset the losses incurred by the less fortunate insurers,” Gottlieb said. This, at least, was the way the so-called “risk corridors” were supposed to work, according to the original legislation. Problem is, it’s not clear that there will be enough health plans this year, or any at all, with excess profits that could be used to offset the losses incurred by insurers who were less fortunate.”

Gottlieb pointed to a hearing in which Mandy Cohen, the Acting Administrator of the Centers for Medicare and Medicare Service’s Center for Consumer Information and Insurance Oversight delivered that message on Wednesday. Cohen's discussion on the user fees starts at 19:40 and runs eight minutes.

House Subcommittee on Economic Growth, Job Creation and Regulatory Affairs, Chairman, Mr. Jordan asked Cohen, “Do you think if fact that it does cost… do you think you have the authority to cover those costs to make those payments?”

“So I’m not the lawyer but my understanding is that our authority to make those payments comes from our ability to levy user fees. So I do believe that authority,” said Cohen.

Warnings of the legality of health law’s risk corridor payments memo was released back in February 2014 by the House Energy and Commerce Committee that raised serious questions about the ability of the Obama administration to pay insurers through the health care law’s risk corridor program.

In the release by the House Energy and Commerce Committee, HHS Secretary Sebelius and CCIIO Director Gary Cohen said that the Obama administration did not know how much taxpayers would be on the hook for under the health care law’s risk corridor program.

In that memo, it stated, “An agency may not create a revolving fund absent specific authorizing legislation. In the absence of any specific directions, federal law requires such amounts to be deposited in the General Fund of the Treasury, from which they may be further appropriated by Congress.”

Energy and Commerce Committee Chairman Fred Upton (R-MI) said at the time of the release of the memo, “The underlying question is, does the administration have the authority to make the payments to the insurance industry? This memo raises serious questions on the legality of the administration’s plan, just the latest in a pattern of unilateral delays and actions outside the bounds of the law. We must protect taxpayer dollars even as the administration rushes to cover up its failures in implementing the health law.”

In January 2014, Charles Krauthammer also warned about the impending problems with Obamacare concerning what is known as Plan B, a government bailout of insurance companies and that the Obama administration would not admit it existed for political reasons but that the plan does exist in the Affordable Care Act bill.

Nevertheless, Gottlieb alluded to the fact that all taxpayers will be paying a higher cost for healthcare.

“The money drawn off the newly proposed user fees (tax) would be used to finance the risk corridors. This scheme is largely aimed at shifting money between insurers that lost excessive amounts of money, and those that were profitable,” said Gottlieb. “The red ink was inevitable. Now all of us will be forced to pay for it, whether we have an Obamacare plan or not. That new tax will be passed onto everyone in the form of higher premiums.”