Congress Must Stop Obamacare Bailouts

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Posted by Toni-Anne Barry, Alexander Hendrie on Tuesday, October 18th, 2016, 10:00 AM PERMALINK

Six years after it was signed into law, Obamacare is failing. Insurers are hiking premiums or leaving Obamacare marketplaces because they cannot make any money. Taxpayer financed co-ops are collapsing despite generous loan terms. Individuals on the exchanges are losing their plans and find their already limited healthcare choices narrowing.

The President should acknowledge that the law is broken and work to reform the system to lower costs, improve quality, and ensure all Americans have access to healthcare that best suits their individual needs. Instead, the Obama administration is pushing several taxpayer funded bailouts of the law through the risk corridor and transitional reinsurance programs.

In the past few years, the government has stolen a total of $8.5 billion in taxpayer dollars to illegally fund Obamacare through programs like reinsurance. If Congress fails to act, the law could provide more than $170 billion in corporate welfare payments to special interests.

 

Over 50 conservative groups have signed a coalition letter urging congress to stop the Obamacare bailouts. Congress must reassert their authority and stop the Obama administration from using taxpayer dollars to bail out the failed programs.

Reinsurance Bailout Costing Taxpayers $3.5 Billion: In order to disguise the costs to American families, the law has relied on a web of confusing spending programs, subsidies, and taxes. One program, known as transitional reinsurance imposed a fee on each individual with private health insurance to raise $25 billion, including $5 billion that would go back to taxpayers via the Treasury general fund.

In both 2015 and 2014, the program failed to take in the expected sums, so the Department of Health and Human Services (HHS) decided to illegally funnel funds to Obamacare insurers. As announced earlier this year, Obamacare insurance companies would receive $7.7 billion through the reinsurance program – $6 billion obtained from a fee on private health insurance and $1.7 billion taken from the Treasury general fund.

Because HHS did the same last year, a total of $3.5 billion has been stolen from taxpayers using the reinsurance program.

Section 1341 of Obamacare, which establishes reinsurance, explicitly allocates that taxpayer dollars “shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program established under this section.”

Multiple legal opinions have concurred that the reinsurance bailout is illegal:

  • A opinion released by the Government Accountability Office (GAO) found that HHS was ignoring federal law by diverting funds from Treasury to Obamacare insurers.
  • Similarly, a memo released by analysts at the nonpartisan Congressional Research Service found that federal law “unambiguously” states funds must be deposited into the Treasury general fund.
  • Former White House Counsel C. Boyden Gray also called the diverting of funds “unlawful” and questioned how it could possibly withstand legal scrutiny.

 

Congress a duty to step in and block this illegal action. They can do so by passing the Taxpayers Before Insurers Act, legislation introduced by Congressman Mark Walker (R-N.C.) and Senator Ben Sasse (R-Neb.) that forces HHS to return the stolen $3.5 billion to taxpayers. This pro-taxpayer legislation forces the Obama Department of Health and Human Services to obey the law and return billions in funds to their rightful owner – the American people. If they fail to do so, the legislation strips HHS of billions in taxpayer funds.

Risk Corridors Settlements Will Cost Taxpayers Billions More: Like the reinsurance program, the risk corridor program was created as a “stabilization” program when Obamacare was passed into law. The program was designed to encourage insurers to take on higher risk individuals by transferring funds from insurers who made financial gains to those that posted losses. Because insurers were unable to make any money from operating on exchanges the program failed to work as expected.

For the 2014 season, insurance providers requested $2.87 billion in payments but the program took in $362 million, just 12.6 percent. Federal law requires the program to be budget neutral, so the federal government was unable to pay out the remaining $2.5 billion to insurers off the backs of taxpayers, as they attempted at the end of last year.

Despite this restriction, the Obama administration is now looking to pay out this money in their final days of office. The Center for Medicare and Medicaid Services (CMS) blatantly announced in a memo that it intends to circumvent federal law and the will of Congress by offering settling with insurance companies that have sued over the Risk Corridor program. The federal government will do this by offering them settlements from the Judgment Fund, which is outside the scope of Congressional appropriations.

Like the reinsurance bailout, there is no question this action is illegal. The Government Accountability Office has again said there is no legal justification. Their analysis shows that when a government agency cannot pay its dues, it must get funding through Congress. Even the Obama Department of Justice has said that insurers aren’t entitled to the billions that CMS wants to pay them. 

The law is clearly imploding. Rather than push bailouts to Obamacare at the expense of taxpayers, the administration should work with Congress to find fixes to the law.  

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