Obamacare's Mandated Insurer Bailouts Are In Trouble - And That Could Be Fatal to the Law

This is from Megan McArdle at Bloomberg: 

As seems to be customary for a Friday, we have a lot of news out on the Patient Protection and Affordable Care Act. The Barack Obama administration is firing CGI Group Inc., the company with one of the largest contracts for work on the troubled health-care exchanges. This was probably inevitable, but coming at this point, it suggests one of two things: that the exchanges are now stable enough that the administration can afford to claim a scalp, or that CGI’s work is so bad that it's better off being fired even if the exchanges are none too stable. The first option seems more likely to me, but the second is certainly not out of the question.

More interesting is what’s going on with the insurers. They are simultaneously asking the administration for more money and trying to stave off Republican efforts to curtail the backdoor bailouts they’re already getting. ...

But while the business logic is obvious, the political logic is considerably more dubious. I was initially skeptical that a repeal of the risk corridors had any chance of getting through a Democratic-controlled Senate, but I’ve heard a persuasive argument that this is just so politically toxic that Senate Democrats, and even the White House, may well go along. The optics of funneling money to the insurers through these programs is absolutely terrible. And now they are asking the administration for more money -- the insurers want the extra expenses that the exchange debacle has imposed excluded from calculating their “medical loss ratio” requirements, which mandate that at least 80 percent of their expenses go toward treatment, not administrative overhead. ... White House attempts to explain that it isn't a bailout will be complicated by the fact that it obviously kind of is. ...