The Affordable Care Act (ACA), more commonly known as Obamacare, did not have a very good October and it will only get worse for the President’s vaunted healthcare “reform” plan.  Temporary walls that were built to protect Obamacare from market forces and normal consumer responses are starting to collapse.

Hit One: On October 1, the Centers for Medicare and Medicare Services (CMS), the agency that oversees Obamacare, announced to insurers that they would not be getting the approximate $2.9 billion in risk corridor payments they had hoped for; instead they will only receive approximately 12.6 percent of that amount or $362 million.

The risk corridor payment is one of the “Three Rs,” which are essentially insurance plans for health insurers. These plans are (1) risk adjustment, (2) reinsurance, and (3) risk corridors and were created in ACA.  The Kaiser Family Foundation provides a simple explanation of the programs.  The purpose of the Three Rs was to help insurers through the transition period by minimizing their risk and stabilizing their premiums as they adjusted to ACA’s requirements.  Only the risk adjustment program is permanent; the reinsurance and risk corridor payments are due to expire at the end of 2016.

While consumers really end up paying for these programs in the end through higher premiums, co-pays and co-insurance costs, the risk corridor program provided the most direct risk to taxpayers.  Simply put, if the insurers lost money, they could seek unlimited taxpayer funds through the risk corridor program to bail them out.  Senator Marco Rubio (R-Fla.) was the first to provide a clarion call about the dangers risk corridors presented to taxpayers and urged the program to be budget neutral.  That became a reality in the fiscal year 2015 CRomibus spending bill and taxpayers were saved from spending $2.5 billion to bailout the insurance industry.

However, taxpayers still need to keep their hands on their wallets.  Inside Health Policy reported on October 29 that “[Health and Human Services] HHS Secretary Sylvia Burwell hasn’t closed the door on the possibility of doing something about the risk corridor program to ease the pain for insurers, after the department announced it would pay only 12.6 percent of what companies expected and led several plans to say they will shutter at the end of the year.  ‘What we are doing is exploring our options,’ Burwell told Inside Health Policy at a meeting with reporters on Thursday ... ‘As we’ve said with the risk corridors before, we believe it is a commitment of the Affordable Care Act.  We know that the first payments in for next year will go towards this, but we are continuing to examine what, if any, options that we have in the form that you described, as well as administratively.’”

It looks like it’s not only the President that uses a pen and a phone to skirt around Congress’s directives.  However, Sen. Rubio is not to be deterred from protecting taxpayers from another bailout and has introduced S. 123, “Obamacare Taxpayer Bailout Prevention Act.” The hope is to have it included in the fiscal year 2016 Omnibus spending legislation.

Hit Two: On October 15, HHS Secretary Burwell announced a surprisingly low enrollment number for Obamacare in 2016.  The Capitol Hill newspaper, Politico stated, “The enrollment goal is less than half of what the Congressional Budget Office projected, and reflects the White House’s acknowledgment that the sign-up season beginning Nov. 1 will be one of the most challenging so far.  Lowballing the target makes it more likely that it will exceed its 2016 goal despite those difficulties.”  The penalty for not complying is a minimum of $695 for the year or 1.0% of taxable income, whichever is higher.

Considering Obamacare’s sky-high premiums and deductibles, it should be no surprise that many people, especially those that are young and healthy, are calculating that it’s still cheaper to pay the tax and take the risk not to have health insurance.

Hit Three:  What became almost a weekly occurrence in October were announcements of Obamacare Consumer Operated and Oriented Plans (CO-OP) collapsing.  My October Waste Watcher discussed the collapse of the CO-OPs, which were primarily caused by burdensome regulations and a profound naivety by Obamacare’s designers on how difficult it is to start an insurance company from scratch.  The Waste Watcher focused on the nine CO-OPs that had either closed their doors or would do so by the end of the year.  Those nine failures have cost taxpayers a minimum of $983 million, or 41 percent of the $2.4 billion appropriated loans.

Since the article was posted online, two more CO-OPs have announced they will close by the end of the year.  Utah’s Arches CO-OP announced its demise on October 27 and on October 31, just in time for Halloween, Arizona’s CO-OP Meritus will join the walking dead.  These CO-OPs add a “mere” $182.9 million more to this costly debacle.  Now thousands of soon-to-be former CO-OP customers are scrambling for new health insurance thanks to another false promise that Obamacare would provide everything at a low price.

Hit Four: On October 23, the Government Accountability Office (GAO) released a report at a hearing held by the House Energy and Commerce Subcommittee on Health, which demonstrated once again that CMS is not being a good steward of taxpayer money.  The investigative report showed that people using false information can receive taxpayer-funded subsidies or Medicaid for which they are not eligible.  The GAO released a similar report in July 2014 that tested CMS’s internal controls for healthcare coverage determinations and found them lacking.  A July 2015 report found similar results in which the Marketplace approved subsidized coverage for 11 of 12 fictitious GAO applicants even though they did not provide all the required documentation.  The applicants received approximately $30,000 in annual advance premium tax credits in addition to being eligible for lower health costs due at the time of service.

Based on the new report just released, it looks like CMS has done nothing to mitigate the problems during the past year.

The GAO tested CMS’s application and enrollment controls for subsidized healthcare plans for two states (New Jersey and North Dakota) that utilize the federal exchange Healthcare.gov and two states that run their own exchanges (California and Kentucky).  GAO’s fictitious applicants, which provided false information, were able to obtain health insurance.  The false information included providing obviously fake social security numbers, i.e. starting with 000, while other applicants had duplicate enrollment or claimed their employer did not provide minimum essential insurance coverage.

GAO’s fake applicants were also able to gain access to Medicaid with falsified information.

Shockingly, according to Inside Health Policy, several Democratic congressmen and HHS seemed more upset at the process than whether fraudulent behavior was being committed and taxpayer money was being stolen.

"[Rep. Frank Pallone (D-N.J.)] expressed disappointment with GAO's tactics, including the fake shopper program, and said he has sent a letter to U.S. Comptroller Gene Dodaro to discuss those concerns.

‘What is it the GAO is attempting to accomplish here?’ he asked.  He noted the GAO workers are federal employees who get health care, yet seem to be spending time and taxpayer funding to try to take coverage away from people.  He also questioned why a person would go through the effort to defraud the government, with seemingly little financial benefit.

 HHS made a similar argument. ‘It's important to consider whether it's likely that uninsured Americans would replicate the next actions the GAO took, namely knowingly and willfully providing false information in violation of federal law, which could subject the individual to up to a $250,000 fine,’ HHS spokesperson Meghan Smith told Politico.”

Inside Health Policy also pointed out that Seto Bagdoyan, an audit services director at the GAO, “disagreed with Democratic arguments that there would be little financial reward for a consumer to fraudulently enroll in a health plan, especially since they would still have to pay their portion of the premium.  He said GAO views the subsidies as beneficial since they lower out-of-pocket spending on health care, and pointed out that if a consumer chooses to get their tax credits at the end of the year, it could result in lower taxes or a potential refund.”

Perhaps some members of Congress and HHS need to be reminded of the GAO’s role and mission.  It is an “independent, nonpartisan agency that works for Congress.  Often called the ‘congressional watchdog,’ GAO investigates how the federal government spends taxpayer dollars.”  In other words, the GAO is doing its job by investigating how CMS is spending our tax dollars.

Hit Five: Now that October is over and Obamacare’s “open season” has begun, Americans will be hearing more about higher premiums and out-of-pocket costs.  The New York Times reported on October 30th, “Health insurance consumers logging into HealthCare.gov on Sunday for the first day of the Affordable Care Act’s third open enrollment season may be in for sticker shock, unless they are willing to shop around. Federal officials acknowledged on Friday that many people would need to pick new plans to avoid substantial increases in premiums.”  And an October 31 the Motley Fool article provides the three major reasons why Obamacare is not working as promised.

But there are no surprises here.  Americans were warned during the early healthcare reform debates in 2009 and 2010 that Obamacare would not work.  Too bad not enough Americans listened.