The Obamacare ‘Bailout’ Conservatives Don’t Want to Talk About

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Patient Luis Gutierrez, right, talks with Dr. Javier Hiriart at Camillus Health Concern, Wednesday, June 27, 2012, in Miami. (AP Photo/Lynne Sladky)

Patient Luis Gutierrez, right, talks with Dr. Javier Hiriart at Camillus Health Concern, Wednesday, June 27, 2012, in Miami. (AP Photo/Lynne Sladky)

In recent months, conservative opponents of the Affordable Care Act seized on an issue that they were sure was going to be a big winner for their cause: the “Obamacare bailout.” The Weekly Standard’s Jay Cost wrote that “conservative thought leaders have begun to sound the alarm” about a “bailout [that] could feasibly run into the tens of billions of dollars.”

The narrative was built on two relatively obscure provisions of Obamacare: “risk corridors” and “reinsurance.” The short version is that the law contained provisions which would protect insurers from losses in the early years of the ACA if it didn’t function as intended. Think of it as a kind of insurance for insurers — they pay into a pool that would help spread a single company’s big losses across the whole industry. (A detailed explanation of what those terms mean can be found here.)

Jonathan Chait, calling the talking point a “new Death Panel,” argued that it was a cynical attempt to capitalize on the fact that “’bailout’ may be the single most unpopular policy concept in American politics.” But despite conservatives’ high hopes, the narrative died an untimely death last week, when the Congressional Budget Office (CBO) projected that the provisions will actually make the government around $8 billion in profits — it’s a reverse bailout if anything. (This followed the speedy demise of another widely touted claim that the CBO projected Obamacare would cost the economy two million jobs.)

But in a new twist, Republicans in some states that refused to expand Medicaid under the ACA are being forced into their own “government bailout.” Slate’s Dave Weigel explains:

When Democrats predict that the GOP will eventually have to embrace the Affordable Care Act, they usually start with the plight of rural hospitals. In the 25 states that have accepted the Medicaid expansion, these hospitals are taking in reimbursements when they cover the indigent who are newly covered. In the 25 states that haven’t—no reimbursements. Red states (and red-run blue states like Wisconsin) first embraced the Supreme Court decision that made Medicaid expansion optional, and saved them from putting up 10 percent of the cost of a new annual entitlement. But the costs of doing nothing are burning up the plains.

How can a Republican governor fix this problem without accepting the Medicaid expansion? Ray Henry and Christina Cassidy explain: They’ve trying to bail out hospitals within the states. In South Carolina the state has agreed to reimburse 100 percent Medicaid spending at distressed hospitals. In Georgia the Republican charged with this year’s budget is looking at a bailout worth “tens of millions of dollars.” In Mississippi, Gov. Phil Bryant wants $4.4 million for a bailout.

The refusal to expand Medicaid remains a triumph of ideology over good governance. Many of the states refusing the expansion are among those with the highest rates of uninsured citizens. According to the Kaiser Family Foundation, the refusals will leave around five million people who earn too little to qualify for the ACA’s insurance subsidies and fail to qualify for states’ existing Medicaid programs in a “coverage gap.”

Ironically, to the degree these states have to bail out their rural hospitals with state dollars, it’s also the antithesis of fiscal conservatism.

Joshua Holland is a senior digital producer for BillMoyers.com. He’s the author of The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs and Corporate America) (Wiley: 2010), and host of Politics and Reality Radio. Follow him on Twitter or drop him an email at hollandj [at] moyersmedia [dot] com.
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  • Anonymous

    This phrase “remains a triumph of ideology over good governance,” seems to be the republican mantra. From their perspective their seems to be no possibility for good governance, so ideology trumps everything.

  • Anonymous

    What is weird is that the farm bill has an identical provision (actually had it in the previous bill that set up revenue or income insurance) where taxpayers cover all insurers admin costs as well as all insurance losses. Of course in that farm bill insurance program taxpayers are also footing the bill for 65% of the insurance premiums which directly supports the insurance firms.

    Better yet, that coverage of all insurance losses never ends for the farm bill.

  • Anonymous

    To the current group of Republican party controllers ideological purity is identical with good governance.

  • Anonymous

    Obama is hammering out a Health Care Plan similar to Harper’s in Canada. Mind you, Canada’s Health Care will be slashed. Canadian Finance Minister is, bringing Canada’s cost of living more in line with, the U.S. cost of living.

    Big business is pushing for the NAU. They only want one single government to deal with rather than three. The 3 Amigo’s are having another meeting very shortly. I smell, a big fat NAU rat.

  • Anonymous

    I saw that.
    Signed, Karma

  • Deb

    Canada’s Health Care Plan does not belong to Stephen Harper, it has been in place since 1961. Mr. Harper is well aware that slashing health care is not an option if a party wants to continue to govern. A poll taken in 2009 by Nanos Research found 86.2% of Canadians surveyed
    supported or strongly supported public solutions to make public
    health care stronger.

    Mike Harris, Progressive Conservative premier of Ontario back in the 90s apparently didn’t poll voters before he closed hospitals and slashed health care budgets in his province. There hasn’t been a PC government elected in Ontario since.

    I think your “Canamerexico” theory can be safely stowed for now. Believe me, the last thing Canadians want is to be Americans.

  • sk

    Can’t fix ideological blindness

  • http://www.huffingtonpost.com/hal-donahue/ Hal Donahue

    One more sad example that conservative/Republican failed economic policies increase taxes and reduce services

  • Terence

    ‘Similar to Harpers’? How so? I am a dual-citizen, and see very few implementable similarities.

  • Anonymous

    “Of the states not moving forward with the expansion, only Wisconsin will provide full Medicaid coverage to adults without dependent children in 2014.” http://kff.org/health-reform/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/

    It’s a common misconception that the coverage gap is from 100%-138% of FPL. Many states have much lower eligibility cutoffs for Medicaid. In some states, the coverage gap is 20-138% of FPL.

  • Unique

    You need to tell this continually, to your fellow Missourians.
    They need to vote the representatives that are only
    representing themselves OUT in November and beyond.

  • Unique

    The only “Death Panels” I see are the Republicans in those
    states that refuse to institute ACA.

  • Anonymous

    I am not defending the GOP, but there are always two sides to every story.
    You mention needy people. I find the number of needy in this country overwhelming, as a taxpayer and as a community member who sees their sad plight every day. It would behoove both parties of our government to step back and consider offering real help to the most unfortunate Americans: a way to a better education and/or job training. Jobs help people be productive. It gets them off government-funded programs. As for ObamaCare, it probably would have been much less expensive in the long run – and more efficient – to make Medicare available to the genuinely needy and sick.