Category Archives: ObamaCare

Greensboro News Record AP article Employment statistics show hiring is strong, August 29, 2014, Orwellian extrapolation, 11.5 million more not in labor force since Jan 2009, Could step up hiring?

Greensboro News Record AP article Employment statistics show hiring is strong, August 29, 2014, Orwellian extrapolation, 11.5 million more not in labor force since Jan 2009, Could step up hiring?

“Over the last six months, of the net job creation, 97 percent of that is part-time work,”…Keith Hall, former BLS chief

“The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter of 1983, which was also the sixth quarter of the Ninth Three-Year Plan. Today’s issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston’s job was to rectify the original figures by making them agree with the later ones. As for the third message, it referred to a very simple error which could be set right in a couple of minutes. As short a time ago as February, the Ministry of Plenty had issued a promise (a ‘categorical pledge’ were the official words) that there would be no reduction of the chocolate ration during 1984. Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grammes to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.”…George Orwell, “1984”

 

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

There were 11.5 million more people not in the labor force in July 2014 than there were in January 2009 when Obama took the White House.

Of course there are going to be fewer layoffs.

There are fewer people working, payrolls have already been cut to the bone and there are more part time jobs.

The labor force participation rate has dropped 2.8 percent.

I expect the AP to take the questionable data and spin it in Orwellian fashion.

For example:

“When employers hold onto their workers, it suggests they are more confident in the economy and could step up hiring.”

Could?

Pigs could fly if properly equipped.

I was disappointed to find the following headline over the AP regurgitated article in the Greensboro News Record.

“Employment statistics show hiring is strong”

Here is the same article on the internet from CBS 46 Atlanta.

“The number of Americans seeking unemployment benefits slipped 1,000 last week to a seasonally adjusted 298,000, a low level that signals employers are cutting few jobs and hiring is likely to remain strong.

The four-week average, a less volatile measure, dropped to 299,750, the Labor Department said Thursday. That’s just 6,000 higher than four weeks ago, when the average fell to the lowest level in more than eight years.

“The downward trend … is now clear and strong,” said Ian Shepherdson, an economist at Pantheon Macroeconomics. Shepherdson forecasts that employers added 250,000 jobs this month.

Applications are a proxy for layoffs. When employers hold onto their workers, it suggests they are more confident in the economy and could step up hiring.

The applications data is the latest sign that the job market is steadily healing. Employers have added an average of 230,000 jobs a month this year, up from an average of 195,000 in 2013. Average job gains since February have been the best in eight years.

The unemployment rate ticked up to 6.2 percent in July from 6.1 percent in June. But that was because more Americans began looking for work. Most didn’t immediately find jobs, but the rising number of job seekers suggests that people are growing more confident about their prospects.”

Read more:

http://www.cbs46.com/story/26392282/applications-for-us-unemployment-aid-slip-to-298k

CBO raises 2014 budget deficit by 14 billion, Lowers GDP from 3.1 to 1.5 percent, Red ink to rise in coming years if Washington doesn’t change current laws, Lower tax revenue

CBO raises 2014 budget deficit by 14 billion, Lowers GDP from 3.1 to 1.5 percent, Red ink to rise in coming years if Washington doesn’t change current laws, Lower tax revenue

“The number of people receiving health coverage through public exchanges under President Obama’s health-care overhaul will total roughly 25 million by 2018, will add more than $1 trillion to the federal deficit over the next decade and could very well create a small contingent of workers unwilling to work for fear of losing federal medical aid.”
“One of the CBO’s most intriguing estimates is that by 2017 there will be 2 million fewer full-time jobs on the market than there would have been without Obamacare, and that figure could climb to 2.5 million by 2024.”…Market Watch February 4, 2014

“What do you think a stimulus is? It’s spending – that’s the whole point! Seriously.”…Barack Obama

 

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

From Market Watch August 27, 2014.

“CBO forecasts $506 billion budget deficit for 2014″
“The Congressional Budget Office on Wednesday raised its estimate of the federal government’s budget deficit for the current fiscal year as it slashed its growth forecast, and warned red ink was due to rise in coming years if Washington doesn’t change current laws.

In an update of budget and economic projections for 2014 to 2024, the nonpartisan CBO said the U.S. government’s deficit for fiscal 2014 will be $506 billion, or 2.9% of gross domestic product. The new estimate is $14 billion more than the agency’s prior estimate for the year, issued in April.

The new estimate is largely a result of lower-than-expected revenues for the year — particularly receipts of corporate taxes. CBO now estimates that all revenues will be 0.9% below its projection in April. Corporate tax revenues will be $315 billion in 2014, compared to a prior estimate of $351 billion, CBO said.”
“The agency lowered its projection of GDP growth for the year, to 1.5% from 3.1%, “reflecting the surprising economic weakness in the first half of the year.””
“But there are fiscal pressures on the horizon. The CBO said deficits will start to rise again after 2015, and approach $1 trillion in 2024.”

Read more:

http://www.marketwatch.com/story/cbo-forecasts-506-billion-budget-deficit-for-2014-2014-08-27?dist=countdown

 

Obamacare negatively impacts employment and health care costs, Federal Reserve Bank of Dallas reflects Philadelphia Fed survey, 48.6 percent raises costs a lot in 2014, 25.9 percent employ fewer workers

Obamacare negatively impacts employment and health care costs, Federal Reserve Bank of Dallas reflects Philadelphia Fed survey, 48.6 percent raises costs a lot in 2014, 25.9 percent employ fewer workers

“Over the last six months, of the net job creation, 97 percent of that is part-time work,”…Keith Hall, former BLS chief

“Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA. One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.

Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”…Duke University Fuqua School of Business December 11, 2013

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

Reported at Citizen Wells August 22, 2014.

From the Philadelphia Fed August 2014.

“In special questions this month, firms were asked qualitative questions about the effects of the Affordable Care Act (ACA) and how, if at all, they are making changes to their employment and compensation, including benefits (see Special Questions). Over 18 percent of the firms indicated that the number of workers they employ was lower because of the ACA; 3 percent indicated higher levels. The same percentage (18 percent) indicated that the proportion of part-time workers had increased. Regarding health insurance benefit coverage, 41 percent said their coverage was unchanged, but 52 percent indicated modifications to their offerings. Among those modifying their health insurance coverage, higher deductibles (91 percent), higher worker contributed premiums (88 percent), and higher out-of-pocket maximums (77 percent) were the most cited changes.”

The Federal Reserve Bank of Dallas has just presented their survey.

“How would you say the Affordable Care Act (ACA) has affected your firm’s health care costs in question 1 above?”

“Raise costs a lot”

“Effect of ACA in 2014″

48.6 percent

“Expected effect of ACA in 2015″

54.7 percent
“How, if at all, are you changing (or have you changed) any of the following because of the effects that the ACA is having on your firm?”

“The number of workers you employ (including full-time, part-time, etc.)”

“Lower due to ACA”

25.9 percent

“The proportion of your workers that are part-time, contract or temporary”

“Higher due to ACA”

16.5 percent

“Prices you charge to customers”

“Higher due to ACA”

35.3 percent

http://www.dallasfed.org/microsites/research/surveys/tmos/2014/1408/specquest.cfm

Over one third of these companies are passing on the higher cost of Obamacare to their customers!

 

Janet Yellen employment concerns, NY Times protects Obama, Chicago Suntimes Philadelphia Fed and Duke Fuqua School of Business blame Obamacare for unemployment and part time jobs

Janet Yellen employment concerns, NY Times protects Obama, Chicago Suntimes Philadelphia Fed and Duke Fuqua School of Business blame Obamacare for unemployment and part time jobs

“Over the last six months, of the net job creation, 97 percent of that is part-time work,”…Keith Hall, former BLS chief

“Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA. One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.

Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”…Duke University Fuqua School of Business December 11, 2013

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

Janet Yellen, despite the fact she has tap danced around the real employment problems in this county, today in Jackson Hole did address some of the problems with employment in this country.

“Consider first the behavior of the labor force participation rate, which has declined substantially since the end of the recession even as the unemployment rate has fallen. As a consequence, the employment-to-population ratio has increased far less over the past several years than the unemployment rate alone would indicate, based on past experience. For policymakers, the key question is: What portion of the decline in labor force participation reflects structural shifts and what portion reflects cyclical weakness in the labor market? If the cyclical component is abnormally large, relative to the unemployment rate, then it might be seen as an additional contributor to labor market slack.

Labor force participation peaked in early 2000, so its decline began well before the Great Recession. A portion of that decline clearly relates to the aging of the baby boom generation. But the pace of decline accelerated with the recession. As an accounting matter, the drop in the participation rate since 2008 can be attributed to increases in four factors: retirement, disability, school enrollment, and other reasons, including worker discouragement.8 Of these, greater worker discouragement is most directly the result of a weak labor market, so we could reasonably expect further increases in labor demand to pull a sizable share of discouraged workers back into the workforce.”

http://www.federalreserve.gov/newsevents/speech/yellen20140822a.htm

The NY Times, as it often has, reports on the Yellen speech and quotes one of the most ludicrous papers as an excuse for the lack of employment.

I was just going to pull up the NY Times Yellen article from this afternoon and got this message:

“The requested URL “http://www.nytimes.com/” cannot be found or is not available. Please check the spelling or try again later.”

I will try again later.

***  Update 7:03 PM article back up ***

“Ms. Yellen’s optimism that Fed policy can increase employment and wages is also challenged by a growing body of economic literature purporting to show that the decline of employment is caused largely by factors that predate the recession, and that cannot be addressed by continuing to hold down interest rates.

The economists Stephen J. Davis, of the University of Chicago, and John Haltiwanger, of the University of Maryland, argued in a paper presented Friday at the conference that employment had declined because the labor market has stagnated in recent decades. Fewer people are leaving or losing jobs, and fewer are taking new ones.

“These results,” they wrote, “suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.”

http://www.nytimes.com/2014/08/23/business/yellen-on-federal-reserve-policy.html

Read the rest of the article.

You will be amazed.

 

From the Duke University Fuqua School of Business, December 11, 2013.

“——————————————-
DUKE UNIVERSITY NEWS
Duke University Office of News & Communications

http://www.dukenews.duke.edu

——————————————-

FOR IMMEDIATE RELEASE: Wednesday, Dec. 11, 2013
CONTACTS: Kevin Anselmo (Duke’s Fuqua School of Business)
(919) 660-7722
kevin.anselmo@duke.edu
or
David W. Owens (CFO Magazine)
(617) 790-3000
davidowens@cfo.com

CFO SURVEY: AFFORDABLE CARE ACT COULD CURTAIL HIRING

Note to editors: For additional comment, see contact information at the end of this release.
Watch professor John Graham discuss the results (or use this link
http://youtu.be/F4oj8d5F9Jo). You may also post this video on your website. Names of CFOs who took part in the survey and agreed to speak with media are available by request.

DURHAM, N.C. — A significant percentage of U.S. chief financial officers indicate that because of the Affordable Care Act (ACA), they may reduce employment growth at their firms and shift toward part-time workers.

A majority of finance chiefs also believe the full Social Security retirement age should be raised to help close the budget shortfall.

Despite these issues, underlying economic conditions are expected to improve in 2014 and, except in Europe, corporate charitable giving remains strong

These are some of the findings from the latest Duke University/CFO Magazine Global Business Outlook Survey, which concluded Dec. 5. The survey has been conducted for 71 consecutive quarters and spans the globe, making it the world’s longest running and most comprehensive research on senior finance executives. Presented results are for U.S. firms unless otherwise noted.

EMPLOYMENT EFFECTS OF THE AFFORDABLE CARE ACT

Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA.
One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.

Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”

Read more:

http://www.cfosurvey.org/14q1/PressRelease.pdf

From the Philadelphia Fed August 2014.

“In special questions this month, firms were asked qualitative questions about the effects of the Affordable Care Act (ACA) and how, if at all, they are making changes to their employment and compensation, including benefits (see Special Questions). Over 18 percent of the firms indicated that the number of workers they employ was lower because of the ACA; 3 percent indicated higher levels. The same percentage (18 percent) indicated that the proportion of part-time workers had increased. Regarding health insurance benefit coverage, 41 percent said their coverage was unchanged, but 52 percent indicated modifications to their offerings. Among those modifying their health insurance coverage, higher deductibles (91 percent), higher worker contributed premiums (88 percent), and higher out-of-pocket maximums (77 percent) were the most cited changes.”

From the Chicago SunTimes August 21, 2014.

“Thanks a lot, Obama.

Add the Affordable Care Act – or, specifically, the big-business Cubs’ response to it – to the causes behind Tuesday night’s tarp fiasco and rare successful protest by the San Francisco Giants.

The staffing issues that hamstrung the grounds crew Tuesday during a mad dash with the tarp under a sudden rainstorm were created in part by a wide-ranging reorganization last winter of game-day personnel, job descriptions and work limits designed to keep the seasonal workers – including much of the grounds crew – under 130 hours per month, according to numerous sources with direct knowledge.

That’s the full-time worker definition under “Obamacare,” which requires employer-provided healthcare benefits for “big businesses” such as a major league team.”

Read more:

http://www.suntimes.com/29402267-761/cubs-cut-grounds-crews-hours-to-avoid-paying-health-benefits-sources.html#.U_fDd_nxrVr

 

 

State employment rates lower in 2014 than 2007, Pew Charitable Trust Aug 19, 2014, Employment rates for 25 to 54 year olds lower, 3.7 percent drop, Safety net programs strained

State employment rates lower in 2014 than 2007, Pew Charitable Trust Aug 19, 2014, Employment rates for 25 to 54 year olds lower, 3.7 percent drop, Safety net programs strained

“11.4%: What the U.S. unemployment rate would be if labor force participation were back to January 2008 levels.” …James Pethokoukis, American Enterprise Institute, June 2013

“For now, the absence of young adults from the housing market continues to put a dent in the homeownership rate, which dropped to 64.8% in the first quarter, compared with 65.2% in the fourth quarter of 2013, according to U.S. Census statistics. The rate was as high as 69.2% in the fourth quarter of 2004. For those younger than 35, the rate has fallen noticeably faster. It slipped to 36.2% in the first quarter, from 36.8% in the fourth. The homeownership rate for this group was as high as 43.6% in the second quarter of 2004.”…Market Watch May 12, 2014

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

From the  Pew Charitable Trust August 19, 2014.

“Percentage-point Change in Employment Rate, CY 2007 to FY 2014″

StateEmployment

“In 2007, leading up to the Great Recession, 79.9 percent of people ages 25 to 54 in the United States had a job. In the 12 months ending June 2014, five years after the recession ended, only 76.2 percent of people in that age group were working.

The latest rates show a slight improvement from fiscal 2013, when 75.9 percent of people in their prime working years had a job nationally. At that time, employment rates were below prerecession levels in 35 states.

Still, at 3.7 percentage points lower than before the recession, the employment to population ratio for prime-age workers shows that the U.S. labor market remains weak. This finding has significant budgetary consequences for states:

Without paychecks, people pay less income tax and tend to buy less, reducing sales and business income tax revenue.
Unemployed people frequently need more services, such as Medicaid and other safety-net programs, increasing costs at a time when state governments may have less tax revenue.
A state-by-state comparison of calendar year 2007 with fiscal 2014 shows:

No state reported employment rate gains for 25- to 54-year-olds.
29 states had statistically significant decreases.
The largest decline in the employment rate was in New Mexico, where 69.9 percent of prime-age workers had jobs in fiscal 2014 — 9.2 percentage points lower than in 2007.
Among the least affected were Vermont and Nebraska, which recorded the smallest observed changes in their current employment rates of 83.3 and 85.2 percent, respectively.
Although unemployment figures receive more media attention, the employment rate is a preferred index for many economists because it provides a sharper picture of changes in the labor market. The unemployment rate, for example, fails to count workers who stopped looking for a job. By focusing on 25- to 54-year-olds, trends are less distorted by demographic effects such as older and younger workers’ choices regarding retirement or full-time education.”

Read more:

http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/fiscal-50#ind3

 

Thanks to commenter bob strauss.

 

NC unemployment rate up to 6.5 percent and labor force drops .3, Labor force participation rate plummets 4.1 percent since Jan 2009, How are dropouts paying bills?

NC unemployment rate up to 6.5 percent and labor force drops .3, Labor force participation rate plummets 4.1 percent since Jan 2009, How are dropouts paying bills?

“11.4%: What the U.S. unemployment rate would be if labor force participation were back to January 2008 levels.” …James Pethokoukis, American Enterprise Institute, June 2013

 

“Nearly half of U.S. companies are reluctant to hire full-time employees because of the ACA. One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.

Other firms will shift toward part-time workers. More than 40 percent of CFOs say their companies will consider switching some jobs to less than 30 hours per week or targeting part-time workers for future employment.”…Duke University Fuqua School of Business December 11, 2013

 

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

I rarely watch News 2 News out of Greensboro, NC. Yesterday, at a family member’s house I heard Julie Luck of News 2 describe the recent news about the NC unemployment rate for July. I was reminded of the Valley Girl speak of years ago.

The News Record did a little better.

“North Carolina’s unemployment rate inched higher for July as the state’s labor force declined by nearly 15,000 over the course of a month, state officials said Monday.

The jobless rate increased by 0.1 percentage points to 6.5 percent in July after being flat for two months, according to a report by the Commerce Department. North Carolina’s unemployment rate was higher than the national rate of 6.2 percent.”
“”The number of employed decreased almost 20,000, when it’s seasonally adjusted, which is quite a bit,” said Kurt, an associate professor of economics at Elon University.

Still, Kurt noted the numbers look better than they did a year ago when the unemployment rate was 1.6 percentage points higher. Total private sector jobs have grown by about 94,000 since July 2013.

“When you compare it year to year, it’s not a bad report,” he said. “Overall, the last year has been good for North Carolina.””

Read more:

http://www.news-record.com/news/n-c-jobless-rate-inches-up-to-percent-for-july/article_16f57002-26fc-11e4-a89d-001a4bcf6878.html

From above:

“Overall, the last year has been good for North Carolina.”

Really?

The labor force participation dropped 1 percent in the past year.

It dropped .3 percent the past month.

The labor force participation rate in NC plummeted 4.1 percent since January 2009.

Obama puppeteer Valerie Jarrett Obamacare insuror bailout increases, House oversight committee report July 28, 2014, Large backdoor bailouts of insurance companies

Obama puppeteer Valerie Jarrett Obamacare insuror bailout increases, House oversight committee report July 28, 2014, Large backdoor bailouts of insurance companies

“Obama’s introduction into the “Combine” came when his wife Michelle was hired by Jarrett in the early 1990s, and served as Jarrett’s assistant in Daley’s office and followed her to the Department of Planning and Development.
Jarrett was appointed chairman of the University of Chicago Medical Center Board in June 2006. She was also made chairman of a newly created Executive Committee of that Board, according to a June 13, 2006 University announcement. In addition, Jarrett was named vice-chair of the University’s Board of Trustees, the announcement states.
Michelle landed a high paying job at the University of Chicago Hospitals. Two months after Obama became a US senator, she was appointed vice president for community and external affairs. Tax returns show the promotion nearly tripled her pay to $317,000 in 2005, from $122,000 in 2004.”…Evelyn Pringle

“What about those rumored billions of dollars the oil rich Arab nations are
supposed to unload on American black leaders and minority institutions?
“It’s not just a rumor. Aid will come from some of the Arab states,”
predicted a black San Francisco lawyer who has close ties to officials of
the Organization of Petroleum Exporting Countries (OPEC).

“The first indications of Arab help to American blacks may be announced in
December.” said Khalid Abdullah Tariq Al-Mansour, formerly known as Donald
Warden, of the Holmes and Warden law firm.”…Vernon Jarrett November 6, 1979

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”…George Orwell, “1984″

 

 

Valerie Jarrett, one of the puppeteers of Barack Obama, for the most part, flies under the radar and escapes scrutiny.

Many people are still unaware of who she is, her long time envolvement with the Obamas and her involvement in Chicago corruption.

I was reminded of this at a gathering Saturday evening when I mentioned her name and the otherwise informed person said “Who is she?”

Many have asked who are the puppeteers controlling Obama. Some, including myself believe that the Saudis are.

Whether Obama is in the Oval Office or on one of his numerous vacations or golf outings, Jarrett is running the White House.

From the House Oversight Committee July 28, 2014.
“In making the case for ObamaCare prior to its passage in Congress, President Obama often vilified insurance companies and decried their large profits. For example, in July 2009, President Obama remarked that “health insurance companies and their executives have reaped windfall profits from a broken system.”1 One month later, he remarked that “nobody is holding these insurance companies accountable.”2 The President’s public criticism of large health
insurance companies was good politics for him and likely contributed to the law’s passage. The text of the law passed by Congress and the White House’s recent actions to protect insurance company profits, however, show the hypocritical nature of the President’s arguments in selling the law.”

“ObamaCare benefited health insurance companies with its unprecedented mandate that individuals purchase government-approved health insurance coverage and with expensive subsidies to assist individuals in purchasing that coverage through ObamaCare exchanges. In addition to providing health insurance companies with a mandate for individuals to purchase their product as well as creating these subsidies, ObamaCare contains large backdoor bailouts of
insurance companies offering ObamaCare-compliant coverage in the individual and small group health insurance market. Essentially, ObamaCare contains two types of bailouts for insurance companies offering ObamaCare-compliant coverage – one bailout transfers money from the vast majority of people with health insurance, and another bailout transfers money directly from
taxpayers.”

“At least one insurance company appealed directly to Valerie Jarrett, Senior Advisor to President Obama and Assistant to the President for Public Engagement and Intergovernmental Affairs, after the Administration signaled its intent in March 2014 to implement the Risk Corridor program in a budget neutral manner. Chet Burrell, the President and CEO of Care First Blue Cross Blue Shield, wrote to Ms. Jarrett that insurers would likely require Risk Corridor payments on net and that budget neutrality would lead insurers “to increase rates substantially (i.e., as much as 20% or more…).””

“Ms. Jarrett intervened and wrote to Mr. Burrell that “the policy team is aggressively pursuing options.” After the Administration explained how it would implement the Risk Corridor program in April 11, 2014 guidance, Ms. Jarrett wrote to Mr. Burrell that the Administration had given insurance companies 80 percent of what they sought.”

“It appears that several companies, including Care First Blue Cross Blue Shield,
underpriced their exchange plans in 2014 due to their expectation of a taxpayer bailout through the Risk Corridor program.”

“Essentially, ObamaCare contains two types of bailouts for insurance companies offering ObamaCare-compliant coverage in the individual health insurance markets throughout the country. The first bailout, ObamaCare’s Reinsurance program, transfers money from the vast majority of people with health insurance to individuals who have purchased ObamaCarecompliant
coverage in the individual market. The amount of this bailout was set by statute and will equal $10 billion in 2014, $6 billion in 2015, and $4 billion in 2016.

The second bailout, ObamaCare’s Risk Corridor program, transfers money directly from taxpayers to insurance companies. There is no statutory limit on the amount of taxpayer exposure for this bailout. According to the information obtained by the Committee, health insurance companies and the co-ops expect a taxpayer bailout of the magnitude of about $1 billion this year alone. Moreover, the information provided by insurers shows that the expected size of the taxpayer bailout has increased by more than 33 percent since October 1, 2013, partly because the Administration ceded to industry demands and unilaterally altered numerous bailout provisions, making them more generous to insurers.”

“ObamaCare’s mix of taxes, subsidies, regulations, and mandates significantly increased the cost of insurance in the individual market. For example, in its rate filings for the 2014 plan year, one of the insurers that provided information to the Committee planned to increase average premiums by 55 percent for its ObamaCare eligible individual members, with a much larger increase for younger individuals.13 The insurer referred to these increases as “dramatic ‘shocks’ on premium rates, out of pocket expenses and reduction in plan choice.”14 The insurer further stated that “only a relatively small percentage (approximately 7 percent) of our members may be eligible for meaningful subsidies to help offset the higher premiums or obtain lower out of
pocket expenses. This means that most will feel the full brunt of the increases.””

“Evidence that Several Companies Underpriced Plans and Now Expect Large Bailouts

The 3R programs, which insulate companies from significant losses, provided insurers with a strong incentive to price aggressively to gain market share. As described by Health Watch, risk corridors “could provide an incentive for an issuer to price its plan competitively … and if this price ends up being too low to cover costs, it will share that burden with HHS, while at the same time gaining market share.”56 Both the Reinsurance program and the Risk Adjustment program provide insurers with similar incentives.

According to Professor Chandler’s estimates, ObamaCare’s Reinsurance program, funded by higher premiums on the vast majority of Americans, provides about a $500 subsidy per covered life for ObamaCare-compliant plans in the individual market.57 With respect to the Risk Corridor program, Professor Chandler testified “that by backstopping the losses, there is
somewhat of an incentive for insurers to underprice, get the business, if things go badly, Risk Corridors bails them out and if things go okay, well, great.””

“Size of the Expected Bailout Has Significantly Increased

Table 2 shows the total expected Risk Corridor and Risk Adjustment payments for the 15 insurers and 23 co-ops as of both October 1, 2013, and May 2014. Table 2 demonstrates that insurers’ expected payments through each program have grown in size over time. Overall, the insurance industry’s expectation for payments through the Risk Corridor program have increased by about 34.7 percent since October 1, 2013. In addition, insurers and co-ops currently expect
payments through the Risk Adjustment program of nearly twice the amount they expected on October 1, 2013.”

“For example, on April 4, 2014, Chet Burrell, the President and CEO of CareFirst Blue Cross Blue Shield, emailed Valerie Jarrett, Senior Advisor to President Obama and Assistant to the President for Public Engagement and Intergovernmental Affairs, “I want to bring to your attention a brewing issue that will negatively impact upcoming ACA premium rates – any chance
for a brief conversation?”87 Later that day, Mr. Burrell and Ms. Jarrett spoke on the phone, and the following day, Mr. Burrell emailed Ms. Jarrett, “[h]ere’s a short summary of the issue I described to you yesterday, as you requested. Thank you for understanding that I am only trying to give a ‘heads-up’ notice on an issue that could produce an unwelcome surprise. …”88 Mr. Burrell attached a document entitled ‘Premium Rate Increase Concern.docx’; which discussed
the “Concern That [the] Recent HHS Rule will cause Sharp Premium Rate Increases.”89 According to Mr. Burrell’s memo:”

Mr. Burrell’s memo is further evidence that insurers generally expect to receive payments through the Risk Corridor program. It also shows that this expectation of receiving payments allowed insurers to keep exchange plan premiums significantly cheaper than they would have been without taxpayers being on the hook for a bailout. Mr. Burrell’s memo essentially presents
the Administration with a choice: face significantly higher premium increases in 2015 for exchange plans or make taxpayers bail out insurance companies.”

Read more:

http://oversight.house.gov/wp-content/uploads/2014/07/WH-Involvement-in-ObamaCare-Taxpayer-Bailout-with-Appendix.pdf