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 House Oversight Committee Accuses Valerie Jarrett of Negotiating with Insurance Companies to give them generous Bailout guarantees in price-hiding scheme

valerie jarrett accused by darryl issa

US NEWS- Paul Gordon Collier-  A House Oversight Committee report from Chairman Darryl Issa alleges that White House Senior Adviser, Valerie Jarrett, was involved in secret meetings with major insurance companies, negotiating favorable bail-out programs for the insurance companies through three provisions in the Affordable Care Act.

The allegations allege the effort was made to help conceal the actual cost of insurance plans under the Affordable Care Act and created a bailout slush fund that puts taxpayers on the hook for billions of dollars (as much as $1.1 billion in 2015 alone).

The three provisions are called the Reinsurance Program, the Risk Corridor Program and the Risks Adjustments Program.  The Reinsurance Program provides compensation to insurance companies for costly medical procedures from ACA-compliant healthcare plans.  This is funded through fees tacked on to most people who currently have insurance.

The Risk Corridor Program is meant to compensate insurance companies when ACA-issued insurance plans issued through the healthcare exchanges lose the insurance companies money.  Finally, the Risk Adjustment program transfers funds from payments made by insurers who have less expensive healthcare needs to cover for insurers who have more expensive healthcare needs.  This provision is again intended to offset losses insurance companies may face when insuring less healthy people.

According to the House Oversight Committee report from yesterday, Valerie Jarret was notified by Insurance companies that the cost of insuring the people in the healthcare exchanges was much higher than anticipated.  Jarret, it is alleged, engaged in negotiations with the insurance companies, culminating in a new deal announced by the White House this past May that modified the risk corridor program.

The changes, applied by executive order, included increasing the fund limits.  From the report:
The 15 health insurance companies and 23 co-ops that provided information to the Committee enrolled roughly 80 percent of all individuals with health insurance coverage purchased through an exchange. Currently, these companies expect Risk Corridor payments of about $725 million directly from taxpayers in 2014. Extrapolating these estimates for the entire population enrolled in ObamaCare-compliant exchange plans means that taxpayers may be on the hook for upwards of $1 billion in 2014 alone.

The law required the Risk Adjustment program be ‘budget neutral’, but current projections suggest the new regulations will increase the budget deficit.  Insurers expect almost twice as much of a ‘bailout’ this year than they did last year, suggesting the enrollees in the healthcare exchanges are not as healthy as originally projected (which suggests the percentage of young people was not as high as was hoped for).

The insurers’ own analysis shows that the pool is much older and at higher risk than originally projected.   As a result of these unexpected outcomes, insurance companies contacted Valier Jarrett directly.  From the repoprt:

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 more¼).”  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.

The report alleges that insurance companies intentionally underpriced exchange plans in 2014, expecting to be compensated for the lower cost in bailouts made through the Risk Corridor Program.  The speculation from some opponents to the ACA is that the administration worked in collusion with the health insurance companies to artificially make the cost of the insurance plans lower than they actually were.  This was done, if true, because the insurance providers and the White House knew hey could use the modified Risk Corridor Program.

The Risk Corridor Program would simply be paid by tax revenues from the overall budget.  This method of funding the insurance programs would hide the actual cost of the insurance programs, making it more politically acceptable by the public.

The allegations in the report suggest that many White House aids worked in conjunction with insurance companies to try to offset the potential political damage of high-cost insurance programs.  From the report:

Key White House employees, including Tara McGuiness, the White House’s Communications Director, and Chris Jennings, Deputy Assistant to the President for Health Policy, and Coordinator for Health Reform from July 2013 through January 2014, traded talking points with health insurance companies on how to best message problems with and also the fact that millions of people were losing their insurance coverage because of ObamaCare. For example, Mr. Jennings and Ms. McGuiness provided talking points to Florida Blue Cross and Blue Shield CEO Patrick Geraghty in preparation for an October 27, 2013, appearance on Meet the Press.

Here is the video for you to discern for yourselves:

The full House Oversight Committee Report can be downloaded here:

Supporters of the Affordable Care Act counter that the negotiations were a normal part of the process as we transition from the old healthcare system to the new systems, that the rise in cost through these programs will be offset by the overall savings projected down the road. Rather than being a scheme to hide the real cost of insurance plans, the programs are intended to provide for a needed safety net while insurance companies transition from the previous to the new system.

Opponents counter that, even if this is not direct collusion, the net result is that Americans will end up paying significantly higher premiums.  The process of acclimating Americans to these higher healthcare premiums over the next few years is ultimately a political decision designed to conceal the actual cost of the Affordable Care Act until the ‘sticker shock’ has had time to wear off.

It is unclear what the next steps for the House Oversight Committee will be or whether they will subpoena Jarrett or any other Obama Administration official to testify in response to the findings.