Americans are well aware by now that Obamacare was sloppily written, a fact that has resulted in numerous unintended consequences that will adversely affect the nation. In light of a recent report from the House Committee on Energy and Commerce, the newly created Early Retiree Reinsurance Program (ERRP) can be added to the list of poorly thought-out provisions of the new law.
A temporary reinsurance program to run through 2014, the ERRP is an attempt to encourage companies to continue employer-sponsored coverage for early retirees between the ages of 55 and 65. Heritage analyst Brian Blase pointed out in a recent report that this program “appears to be mostly a bailout for public-sector and union health benefit programs for early retirees.” However, shifting the cost of benefits for government and other union employees onto federal taxpayers isn’t the only problem with the program.
The House Committee on Energy and Commerce found that the ERRP will be exhausted of funds long before previous predictions. Acting as a bridge to state health insurance exchanges, the ERRP was appropriated $5 billion to reimburse employers 80 percent of the total cost for early retirees’ health expenses that fall between $15,000 and $90,000.
Richard Popper, director of the Office of Insurance Programs at the Center for Consumer Information and Insurance Oversight, first estimated that the program’s funding would run out by 2012—just two years after its startup—but enrollment trends paint a different picture. Within seven months, the ERRP reimbursed 253 plan sponsors covering 5,452 early retirees, to the tune of $535 million. According to the report, “Based on those spending patterns, the fund will exhaust its resources much sooner than originally estimated.”
Five percent of ERRP enrollees spent 10 percent of the program’s entire funds. According to the House Committee Report, “If the remaining 5,199 applicants require a similar level of reimbursement, the program will quickly spend all available funding as early as this year.”
The ERRP program is an inappropriate use of federal taxpayer dollars to begin with. Even worse is that in order to follow through on the promises made by Obamacare, the program is on track to require more taxpayer money, increasing the federal deficit beyond what is already expected. Obamacare should be repealed before American taxpayers continue to suffer as a result of its countless bad policies.
Amanda Rae Kronquist contributed to this post.