Obamacare’s $250 Million Bribery Scheme
David Catron
by

Shortly following last week’s revelation that Obamacare premiums will spike yet again in 2017, the Centers for Medicare and Medicaid Services (CMS) announced that it would offer $22 million in grants to state insurance officials to enforce “compliance with Affordable Care Act key consumer protections.” The Obama administration will, in other words, bribe state regulators to impose price controls on insurers selling coverage through Obamacare exchanges. Where did CMS get the $22 million? From a multi-million dollar slush fund the federal government has quietly used to control state insurance departments over which it has no legal authority.

This money, as CMS puts it, “is part of $250 million in state rate review grants the Affordable Care Act provided to improve the process for how states review proposed health insurance rate increases and hold insurance companies accountable for unjustified hikes.” The press release also claims that the $22 million will be distributed from “unobligated rate review grant funding from prior years.” This is odd considering that $246.9 million of the $250 million has already been awarded. It would be interesting to hear Andrew Slavitt, the Acting Administrator of CMS, explain how he got $22 million from a grant fund in which only $3.1 million remains.

Unfortunately, while it would be entertaining to hear the yarn Slavitt would dream up in response to a congressional inquiry on this point, his answer would probably not be terribly enlightening. He has already demonstrated himself to be a man of less-than-perfect honesty when he lied to Congress about the recoupment of unrelated grants his agency issued to various Obamacare exchanges. Likewise, there probably wouldn’t be much point in asking him why most of the $246.9 million in rate review grants went to Democrat-controlled states. New York, for example, received about $9.9 million. The state of Florida, on the other hand, got no money at all.

Once again, we find taxpayer funds being used for nakedly partisan purposes. But this is, after all, business as usual for the Obama administration. What makes these CMS rate review bribes particularly worrisome is that they undermine a core principle of U.S. government. Just as the President’s executive orders frequently ignore the separation of powers, this grant program actively undermines federalism. The regulation of insurance rates is a prerogative of the states. The central government has no authority, even under Obamacare, to preclude premium increases. In order to circumvent this limitation, the Obama administration set up this grant program.

Any state that has accepted a rate review grant is required to provide the health care apparatchiks at CMS with insurer information and to collude with them in imposing price controls in cases where rate requests are “unreasonable.” It goes without saying that the Beltway Bureaucrats concocted an arbitrary maximum for justifiable rate increases. In its final rule, the Department of Health and Human Services (HHS), under whose aegis CMS operates, “decided on the 10 percentage point threshold.” Any rate request exceeding 9.9 percent will set in motion an onerous federal review that will reduce state insurance officials to the status of spectators.

And most 2017 rate requests will exceed this threshold. As the Kaiser Family Foundation (KFF) reported last week, the 2017 increase for the “most common plan choices” made by individuals buying coverage through Obamacare exchanges will average 10 percent. Moreover, the natural cupidity of all politicians and bureaucrats being what it is, most states have eagerly seized upon all available premium review grants. Some stopped accepting the federal money after receiving start-up funds and a few actually returned their initial grants. But most states have been all too content to surrender a portion of their sovereignty in exchange for these federal bribes.

The tragic irony here is that the officials who accepted these bribes have harmed their states as well as their constituents. They have given away part of their independence from the federal government while exposing the citizens of their states to the ill effects that price controls inevitably have on any market. The arbitrary 10 percent threshold will lead to increased premiums and fewer plan choices for individuals.  Rate increase requests will inch toward 9.9 percent even if the market calls for less, and insurers that need more than 10 percent to remain solvent will drop out of the exchanges à la United Healthcare if higher rates are blocked.

In the end, the taxpayers will have coughed up more than $250 million to make health coverage less affordable and more difficult to acquire. Meanwhile, the state officials who received the bribes and the federal bureaucrats who doled them out claim they are fighting the good fight against the evil health insurance companies. And, as for the “news” media that should be keeping these public officials honest: Have you ever heard of these rate review grants before today?

David Catron
David Catron
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David Catron is a health care consultant and frequent contributor to The American Spectator. You can follow him on Twitter at @Catronicus.
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