Using terms from the Prisoners’ Dilemma, she writes,
if you think the other side might waver, then your best move is to defect immediately. If insurers stand strong but politicians end up repealing the mandate, then they will have lost a bunch of money for nothing. If politicians stand strong but insurers raise prices and/or exit the market, they’ll get slaughtered at the polls.
You can expect to read a lot about “risk corridors” now. There is a provision in the law which, like many provisions, is unclear and subject to different interpretations. The idea is to protect the insurers against having an adverse risk pool by giving them taxpayer compensation if they lose money. Obviously, to the extent that the insurance company is confident that the government has its back, it will lowball the premiums on the plans that it submits.
Senator Marco Rubio has figured out this game, and he intends to try to stop it.
On Tuesday I am introducing legislation that would eliminate the risk corridor provision, ensuring that no taxpayer-funded bailout of the health insurance industry will ever occur under ObamaCare. If this disaster of a law cannot survive without a bailout rescue valve, it is yet another reason why it should be repealed.
So now you have the Obama Administration desperately trying to make government the friend of the insurance industry and a Republican Senator desperately trying to stop that from happening.
It’s a Republican Senator trying to maximize uncertainty and disruption in the insurance market under the guise of labeling something paid into by insurance carriers a “government bailout.”
If the money comes from taxpayers, it is a bailout.
If it was just a reinsurance plan, it could have been set up privately, or even amongst the insurance companies themselves if the administration let it be known they would not be prosecuted under any anti-trust rule for doing so. Lots of reinsurance is done privately. This one is backed by the taxpayer.
There’s a post on Landsburg on how the game she describes is *not* a prisoner’s dilemma….
She mis-stated the prisoners’ dilemma, but she applied the real prisoners’ dilemma correctly to the game between insurance companies and Democrats in Congress.
http://www.cnbc.com/id/101211556
If this report about the payment system not being complete is right, does that mean the insurance companies are not going to get paid the subsidy portion of Obamacare any time soon? I would think that’s a pretty serious issue for them, and would influence their decision to keep cooperating.
Just a thought, but why not have the government take just the expensive healthcare items off the table, and then let people insure as they wish for routine healthcare expenses? That is, force people to pay a progressive income/wealth tax that would pay for catastrophic coverage for all – similar to the way Medicare works now.