At the Washington Free Beacon on Thursday, Ali Meyer writes, "The Department of Health and Human Services lacks the authority to bail out insurers through the transitional reinsurance program with taxpayer funds that were meant to go to the U.S. Treasury, according to a report from the Government Accountability Office." She continued, writing:
"The program designated a target amount for reinsurance payments as well as a specified amount that must go in the general fund of the United States Treasury under section 1341 of the law. In 2014, the law targeted collections of $10 billion for reinsurance payments and $2 billion for the Treasury.
“When total collections for benefit year 2014—$9.7 billion—fell short of the target amount for reinsurance payments, HHS did not allocate any collections to the Treasury or to administrative expenses,” the Government Accountability Office said. “Because the agency collected less than the $10 billion target for reinsurance payments, it allocated all of its collections for those payments.”
“The agency received $7.9 billion in reinsurance claims and paid these in full, leaving approximately $1.7 billion in collections, which it carried over for reinsurance payments in subsequent benefit years,” the report states. “As a result, HHS did not deposit any amounts collected from issuers into the Treasury.”
"Members of Congress asked the Government Accountability Office to review the agency’s actions to see whether it has the authority to prioritize payments to failing issuers over payments to the Treasury if the collections do not hit the specified amount."
In a story headlined, "HHS Robs Taxpayers for Illegal ObamaCare Bailout," at The Patriot Post on Friday, Nate Jackson Jackson writes:
"How bad is ObamaCare? Six years after its passage, it may cost Democrats the Senate. Nearly every bit of news about the law is bad — skyrocketing premiums, co-ops closing, insurers abandoning the exchanges, millions paying the penalty rather than buying coverage. And now the latest. A program called “transitional insurance” collected fees from private insurance plans to redistribute to insurance companies to cover for more expensive enrollees. (It’s similar to but separate from “risk corridors.”) But because ObamaCare has pretty well blown through all cost estimates, the amount collected wasn’t enough. Naturally, the way Barack Obama’s administration handled that runs afoul of the law, because the Department of Health and Human Services did not allocate the required funds to the U.S. Treasury (i.e. taxpayers) before bailing out insurers. In fact, rather than make any payments to the Treasury, it sat on some extra money.
"According to a new GAO report, “When total collections for benefit year 2014 — $9.7 billion — fell short of the target amount for reinsurance payments, HHS did not allocate any collections to the Treasury or to administrative expenses. Because the agency collected less than the $10 billion target for reinsurance payments, it allocated all of its collections for those payments. The agency received $7.9 billion in reinsurance claims and paid these in full, leaving approximately $1.7 billion in collections, which it carried over for reinsurance payments in subsequent benefit years. As a result, HHS did not deposit any amounts collected from issuers into the Treasury.” GAO says HHS doesn’t have that authority. All told, Obama took $3 billion in taxpayer money and gave it to private insurers instead — all because ObamaCare is such a destructive law."
The U.S. General Accountability Office (GAO) legal decision is available here. A .pdf version is available here. The GAO provides the following summary of their decision on the transitional reinsurance program:
"The Department of Health and Human Services (HHS) administers the 3-year transitional reinsurance program established under section 1341 of the Patient Protection and Affordable Care Act. The program, which is financed by statutorily required contributions from participating health insurance issuers and group health plans, makes payments to eligible issuers, to stabilize health insurance premiums and encourage issuer participation in the health insurance markets. Section 1341 designates a specified amount of collections from issuers for reinsurance payments and also directs the deposit of a specified amount of collections in the general fund of the United States Treasury (Treasury). HHS asserts that when collections fall short of the amounts specified in statute the agency has authority to allocate all collections for reinsurance payments, making deposits in the Treasury only if collections reach the amounts specified for reinsurance payments in section 1341. HHS lacks authority to ignore the statute's directive to deposit amounts from collections under the transitional reinsurance program in the Treasury and is required to collect and deposit amounts for the Treasury, regardless of whether its collections fall short of the amounts specified in statute for reinsurance payments. HHS may not use amounts collected for the Treasury to make reinsurance payments."
Yesterday's Wall Street Journal also reported on this story (page A3, WSJ). The lede in Louise Radnofsky's story reads, "The Department of Health and Human Services has been improperly favoring insurers over the Treasury in distributing funds from an Affordable Care program, a congressional watchdog told Republicans on Thursday." She added, "The 2010 health law required federal health officials to collect fees from unions, employers and insurance companies for a program called "reinsurance," to reimburse health plans that sustained a heavier burden of medical claims during the first few years of the law's life."
At the trade publication, LifeHealthPro, last Thursday, Allison Bell wrote:
"The U.S. Government Accountability Office has agreed with House Republicans in a dispute that could cost issuers of individual health coverage about $2 billion.
"The GAO, a congressional watchdog agency, says the U.S. Department of Health and Human Services must pay billions of Affordable Care Act reinsurance program revenue to the Treasury first before making reinsurance program payments to health insurers, according to a new GAO legal ruling."
In The Patriot Post cited above, Nate Jackson noted, "The risk corridor program is facing similar trouble . . . There's not enough money allocated for this bailout either . . . ." This bailout is the subject of an editorial in this weekend's Wall Street Journal (although it's behind the WSJ paywall), which discusses "an illegal bailout for ObamaCare," specifically that "the White house plots a Treasury raid without an appropriation." Here's the editorial's lede:
"We keep reading that Donald Trump poses a unique threat to constitutional norms if he’s elected. His liberal critics would have more credibility if they called out the Obama Administration for its current (not potential) abuses of power, and here’s an opportunity: The Administration is crafting an illegal bailout to prop up the President’s health-care law.
"News leaked this week that the Obama Administration is moving to pay health insurers billions of dollars through an obscure Treasury Department account known as the Judgment Fund. This would be a cash infusion for an ObamaCare program known as “risk corridors,” an allegedly temporary provision in the 2010 law that enticed insurers to participate in the exchanges."
The editorial notes the Judgement Fund is "a 1950s invention that permanently allows for payment of judgments against the U.S," and adds:
"This is an illegal move to spend money where Congress wouldn’t. A June memo from the Congressional Research Service notes that plaintiffs would have to wait until the government digs up more money or Congress decides to appropriate it. In a 1998 letter the Government Accountability Office pointed out that the Judgment Fund is not a tool to “circumvent congressional restrictions on appropriations,” which is precisely what the White House is doing."
If you have a few minutes, write your member of Congress. Tell them your position on the Affordable Care Act, more often referred to as ObamaCare. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:
- Senator Mark Warner (D) -- write to him or call (202) 224-2023
- Senator Tim Kaine (D) -- write to him or call (202) 224-4024
- Representative Don Beyer (D) -- write to him or call (202) 225-4376
Ask for a written response. And tell them ACTA sent you.
UPDATE (10/2/16): From the Heritage Foundation, 9/30/16:
"Heritage Foundation budget expert, Paul Winfree, on the recent Government Accountability office report concerning illegal Obamacare payments being made by the Obama administration:
“Yesterday’s report from the nonpartisan Government Accountability Office (GAO) confirms what many have warned – the administration has been illegally stiffing the American taxpayer in order to prop up the crumbling Obamacare system. The administration's choosing to spend this money illegally should be met with the full force of Congressional inquiries and thorough examination. The American people deserve to know who, within the administration, was responsible for making this decision and those people should be held accountable. This is just another example of the Obama administration’s willingness to do almost anything, even break the law, to bolster the crown jewel of President Obama’s legacy – Obamacare.”
At the Hot Air blog on Friday, September 30, 2016, John Sexteon points out, "A Washington Post story published Thursday confirms most of what has been rumored about a plan by the Obama administration to do an end-run around congress and bailout Obamacare insurers . . . ."
Sexton links to his September 12, 2016 Hot Air post that began:
"The Obama administration appears to be gearing up for an end run around congress. Though it hasn’t happened yet, there are signs the administration is planning to settle lawsuits over the so-called risk corridors program, thereby paying insurers in the form of settlements money that Congress has said the administration cannot pay out directly.
"When Obamacare was created there were three programs designed to help stabilize the market. One of those three programs, called risk corridors, was a kind of financial balancing act among insurers. Those who earned more than anticipated would pay into a pool and those who earned less than anticipated would file claims on the money in the pool.
"What happened is that most insurers lost money in 2014 meaning there was very little money put into the risk corridors pool and a lot of insurers wanting to take money out. At this point the Obama administration would have simply paid out the extra $2.5 billion insurers requested but congress stepped in to insure the risk corridors program would stay budget neutral. From Forbes . . . ."
Here's the September 29, 2016 Washington Post article, reported by Amy Goldstein, that Sexton cited above in his September 30 post.
Finally, an October 2, 2016 Weekly Standard story, reported by Jeffrey Anderson, argues the "Washington Post botches Defense of Obama's Insurer Bailout," and is subtitled, "The truth about ObamaCare's risk corridor program." Anderson's article begins:
"In his latest assault on the separation of powers, President Obama seems poised to take unilateral executive action—in direct defiance of legislation he signed—to bail out insurance companies under Obamacare. In its above-the-fold story on Friday, the Washington Post mischaracterizes Obama's power grab in two important ways: First, it claims that the bailout money is merely what "the government owes" insurers and "what the insurers are owed." Second, it claims that the program in question "originally was not supposed to pay for itself," until Republicans altered it. Each of these claims is false.
"Obamacare's "risk corridor" program was designed to redistribute money in the Obamacare exchanges from health insurers who made money to those who lost money. Profitable insurers would pay in; unprofitable insurers would get paid out. With so many insurers losing money under Obamacare, however, the program was positioned to become a bailout, as there was no guarantee in Obamacare's text that the money paid out wouldn't exceed the money paid in.
"Marco Rubio sounded the alarm in a Wall Street Journal op-ed in November of 2013. He highlighted that the risk-corridor program was poised to become a taxpayer-funded bailout of insurers when it went into effect the following year, and he introduced legislation to prevent this result. A little over two months later, however, the Congressional Budget Office projected . . . ."