Wednesday, May 21, 2014
Taxpayer Bailouts Ahead for Insurance Companies and College Students
After Solendra, AIG, Fannie Mae, Freddie Mac, and General Motors picked the pockets of the U.S. taxpayer, two other groups are waddling over to feed at the public trough.
The first group, insurance companies. Section 1342 of the Affordable Care Act forces taxpayers to make insurers whole from losses they incur selling policies below costs on the ObamaCare exchanges through 2016. The government payouts are designed to hide the 2014 premium increases that would be required to support insurance companies that have enrolled too few young healthier citizens, and too many older, less healthy folks. Without the taxpayer bailouts which will require higher taxes or federal debt, insurance companies would have to raise more visible premiums to avoid large losses and/or bankruptcy.
The second looming and ominous rescue “victim” is the American college student whose debt has doubled to $1.1 trillion since 2007. By the end of 2013, enrollment in the plans—which allow students to rack up big debts and jettison the unpaid balance regardless of amount after a set time period— has surged to more than 40 million debtors. President Obama’s 2011 revised plan required student borrowers to pay only 10 percent a year of their discretionary income in monthly installments.
Under the plan, the unpaid balances for those working in the public sector (e.g. IRS) or for nonprofits (e.g. NORML) are forgiven after 10 years. As a result of federal government over feeding, universities have increased tuition at a rate twice that of medical care, and three times that of all consumer prices over the past decade. Next, watch for Pfizer, maker of Viagra, to be soliciting a bailout to straighten out its financing. Ernie Goss.