GOP on High Alert for Efforts to Fund Obama's Health Insurance Bailout

Republicans in Congress are on the lookout for attempts by Democrats to create a new taxpayer bailout for health insurance companies, something the Obama administration appears to be seeking in order to save insurers from the higher-than-expected costs under Obamacare.

Expectations of a new bailout attempt rose sharply this week, soon after the Centers for Medicare and Medicaid Services published a regulation indicating that CMS is thinking about how to keep health insurers afloat in the face of unexpectedly high costs.

President Barack Obama appears to be seeking a bailout for health insurers, and Republicans are watching for formal proposals. (AP Photo)

Obamacare created a "risk corridors" program, which is a sort of insurance plan for health insurers. Under the program, profitable insurers will pay some of their profits to the government, which will direct them to other insurers that have experienced losses.

In the regulation released last week, CMS said it has received some comments indicating that some fear there may not be enough payments into the risk corridor program to cover all the losses that insurance companies are expecting. That's raising questions about whether the government would need to find new money to make these insurers whole.

CMS replied by saying it still believes it will receive enough risk corridor payments to keep all insurance companies afloat. But CMS added that if this does not come true, the government will use "other sources of funding for the risk corridors payments, subject to the availability of appropriations."

That language already has Republicans in Congress asking the Obama administration how much money it might seek to bail out the insurance companies. However, the administration has not yet offered any specifics to Republicans in the House, which is where the Department of Health and Human Services spending bill will start.

House Republicans have so far held firm against any attempt to provide new funding to implement Obamacare. If that position holds, insurance companies could be forced to accept losses, raise premiums, or accept partial reimbursements under the risk corridors program.

One House aide said it's impossible to speculate about future spending bills, but agreed that the House Appropriations Committee has generally not been inclined to provide new funding to implement the law.

The Obama administration is also known to support a change to the law that would give it access to any surplus risk corridor money it collects that is not used to offset losses by insurers. According to Senate Republicans, the administration proposed this change in its annual budget proposal to Congress.

But Senate GOP aides warn that this proposal is just another way to put taxpayers on the hook for a bailout of insurance companies. They say it would take surplus money away from deficit reduction, and let the Department of Health and Human Services spend it however it wants.

"If the program costs more than it brings in, the Secretary would be able to divert money intended for other programs without seeking congressional approval," one aide said of the administration's plan. "Alternatively, if the program generates a surplus, the Secretary would have the ability to spend funds without going through the normal appropriations process."

If the administration does make an insurance bailout proposal to the House Appropriations Committee, it may have to do so in the coming few weeks. The House is hoping to finish all work on spending bills at the committee level by late June.