Obamacare Bailout

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Detroit may be looking to use Obamacare as a bailout as the city leaders are trying to cut back on retiree health costs as they enter bankruptcy proceedings. The New York Times reported on Monday that the city is proposing a plan that is aimed at reducing it’s 5.7 billion in outstanding retiree health costs. They want to take those retirees that are too young to qualify for Medicare and send them into the ObamaCare insurance market instead, which are scheduled to launch in the following year. Doing so would greatly ease the burden on Detroit by taking the retirees off of city coverage. However, it would also inevitably increase the burden on the federal government, with many of the subsidies from ObamaCare being provided by federal taxpayers.

The plan could serve as a way around the warnings from Obama administration officials and lawmakers that they have no interest in extending a bailout to Detroit. Treasury Secretary Jacob Lew suggested on ABC’s “This Week” on Sunday that the federal government would stay out of the bankruptcy proceedings. "I think when it comes to the questions between Detroit and its creditors, that's really something that Detroit is going to have to work out with its creditors," Lew said.

Based on information from the New York Times, however, other cash strapped cities like Chicago are considering shifting their retirees onto the insurance exchanges as well. There’s no way of being able to predict what will happen. Even if Detroit opts not to take action, Chicago or other cities may take more action on their own. That assumes that the exchanges and the rest of the launch that is scheduled at the beginning of next year happen as planned. After the administration delayed a requirement on mid sized and large businesses to provide employee coverage for the period of one year, there are Republicans that are pushing to delay the requirement on individuals to buy their insurance.

This news comes in complete contrast to recent updates that have suggested that the ObamaCare program and its success may depend on the youth and healthy being able to purchase insurance during the exchanges. It is interesting to see that there are cities that are already trying to figure out a way to use ObamaCare to their advantage to help take care of retirees and seniors. Whether or not that endeavor is successful will vary depending on what happens with the law and whether it’s blocked by the administration itself. In the long run, there are many who are hoping that the new plan for retirees may work, because it would make the healthcare insurance for them far more affordable and would fit more easily within their budgets. However, between the period of now and the launch of the law in 2014, there’s still a large possibility for there to be many changes to the plan and other possible bailout options until then.