After shifting blame to insurers, Obama may give them subsidies


President Obama meets with health insurance chief executives at the White House in Washington November 15, 2013.

Article Highlights

  • This seeming schizophrenia is standard fare in the love-hate relationship between Obama and the insurers.

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  • Obama raised $1.34 million from the “Health Services/HMOs” industry in 2008.

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  • The drugmakers pledged money to help Dem senators endangered by voting for the bill.

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  • If you're confused by this relationship, you've been paying attention.

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President Obama has decided to attack the insurers again. But maybe he’s decided to subsidize them even more. Or both.

In waiving the part of Obamacare that outlaws many insurance plans, Obama tried to shift blame for any cancellations to the insurers. But on Friday, he met with representatives from these same companies, sparking speculation that he had plans to offer them subsidies to help smooth Obamacare's rocky rollout.

This seeming schizophrenia is standard fare in the love-hate relationship between Obama and the insurers.

Obama raised $1.34 million from the “Health Services/HMOs” industry in 2008, according to the Center for Responsive Politics. That is the most any candidate has ever raised from this industry in history, and more than twice what John McCain raised that year.

Right after Obama’s election, America’s Health Insurance Plans (AHIP) – the top lobby for the industry – announced a reform proposal that ended up forming the heart of Obamacare: an individual mandate, plus a requirement that insurers cover all comers and all pre-existing conditions.

The second law Obama signed was the Children's Health Insurance Program Reauthorization Act, which expanded a program to subsidize poor children’s insurance so that it would also subsidize the insurance of middle-class young adults. AHIP had championed this legislation.

As Congress began crafting Obamacare, the insurance industry pledged a million dollars in ad buys promoting “reform.” Obama dropped the insurers’ most hated proposal: a government-run insurer, or “public option.” Obama soon also adopted the industry’s Holy Grail: the individual mandate. Of course, insurance subsidies were always part of the proposal.

Soon, though, things soured. The health industries that spent more on lobbying – drugmakers, hospitals, and doctors – soon elbowed the insurers out of the way. In a deft move, the drugmakers pledged money to help Democratic senators endangered by voting for the bill.

Most importantly, probably, the White House got polling data in the summer of 2009 showing that it was politically popular to campaign against health insurance companies. That’s when the White House rhetoric shifted from talking about “health care reform” to promising “health insurance reform.”

Insurers soured on the bill. Rules limiting insurer profits (known as “Medical Loss Ratio” regulations) could be used to kill private insurers. AHIP complained the law didn't do enough to limit health care spending. The law also included a tax levied only on insurers.

By the end of 2009, insurers were funneling money to outside groups trying to kill the bill, and Obama was mercilessly flogging the industry for its intransigence. Still, things were complicated.

Lobbyists for AHIP, Blue Cross and the other major insurers went to the mat to try and elect Martha Coakley in the January 2010 special election. The election was clearly a referendum on Obamacare, and Coakley was supposed to be the 60th vote for the law. Coakley lost to Scott Brown, despite the health lobbyists’ best efforts.

A few months after the law passed, Health and Human Services Secretary Kathleen Sebelius sternly warned the industry against talking about its effects. “It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act,” Sebelius wrote AHIP head Karen Ignagni, darkly warning “there will be zero tolerance for this type of misinformation…”

Still, the insurers soon started loving Obamacare again. In the 2012 election, Obama led Romney in money raised from the insurance industry.

When conservatives challenged Obamacare’s constitutionality, Blue Cross Blue Shield of Massachusetts filed a brief with the court, siding with the administration.

Sebelius soon started hitting up the insurers for contributions to Enroll America – the nonprofit organization tasked with recruiting customers for the exchanges.

In 50 states, the insurers lobbied lawmakers to implement Obamacare by expanding Medicaid and creating state-level exchanges. For instance, the Missouri Association of Health Plans was a leading member of the state’s Medicaid Expansion Coalition. In Idaho, a state senator who was also an insurance agent argued “Idaho's insurance industry would lose out under a federal exchange, which likely would focus on national companies rather than Idaho insurers.”

Now, Obama is shifting blame to insurers, and threatening to weaken the insurance pool by allowing low-risk customers to keep low-premium plans. Simultaneously, he may be offering insurers some sort of bailout.

If you're confused by this relationship, you've been paying attention.

Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at His column appears Sunday and Wednesday on

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About the Author


Timothy P.
  • Timothy P. Carney helps direct AEI’s Culture of Competition Project, which examines barriers to competition in all areas of American life, from the economy to the world of ideas. Carney has over a decade of experience as a journalist covering the intersection of politics and economics. His work at AEI focuses on how to reinvigorate a competitive culture in America in which all can reap the benefits of a fair economy.


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