Taxpayers may have to foot the bill for insurance companies that lose money operating under the Affordable Care Act, says Stephen Moore, chief economist for The Heritage Foundation.
"There is a bailout mechanism in the Obamacare law, the technical term is 'risk corridors,' " Moore said Friday to Rick Ungar and John Fund, guest hosts of "The Steve Malzberg Show" on
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"It basically says to insurance companies who write Obamacare policies and lose money on these policies [that] the taxpayer has a big safety net … and will essentially bail them out.
"There’s an adverse selection problem here in that sicker and older people are signing up. In my opinion and the opinion of a lot of the actuaries, there’s a real chance that taxpayers are going to have to pay billions of dollars over the next several years to these insurance companies."
Moore said Congress may have the power to put the brakes on any taxpayer bailout.
"A lot of the Republicans like [Sen.] Marco Rubio and others are saying, wait a minute, you have to get an authorization, appropriation from Congress before you can spend this money," he said.
"That’s the big controversy. Unfortunately, a lot of the Republican leaders are saying, let’s not have a big fight about Obamacare again, let’s just provide President Obama the money he’s going to need to bail out these insurance companies."
Ungar noted that under the George W. Bush administration, a similar bailout system for insurance companies that operate under Medicare had been successfully implemented.
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