Congress Must Stop Obamacare Reinsurance Bailout

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Posted by Natalie De Vincenzi, Alexander Hendrie on Friday, July 15th, 2016, 10:19 AM PERMALINK

Obamacare drastically increased both federal spending as well as the costs of health insurance. In order to disguise the costs to American families, the law has relied on a web of confusing spending programs, subsidies, and taxes.

Among these programs are the reinsurance, risk corridors and risk adjustment programs which redistribute funds from different groups directly to Obamacare insurers. In the case of reinsurance, this took the form of 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 practice the reinsurance program has failed to work as promised, like so many other parts of the law. As a result, the Obama Department of Health and Human Services has funneled money from treasury’s general fund in direct violation of federal law. 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, this means a total of $3.5 billion has been stolen from taxpayers using the reinsurance program.

This decision clearly violates federal law. Section 1341 of Obamacare, which establishes reinsurance, explicitly allocates taxpayer dollars that “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.”

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. Similarly, former White House Counsel C. Boyden Gray called the diverting of funds “unlawful” and questioned how it could possibly withstand legal scrutiny.

Despite this, the administration shows no signs of returning taxpayer funds. To force these funds to be returned, Congressman Mark Walker (R-N.C) recently introduced the “Taxpayers Before Insurers Act,” legislation that stops the Obama administration from illegally bailing out insurance companies through redirecting taxpayers funds to the Obamacare reinsurance slush fund. Companion legislation has also been introduced in the Senate by Senator Ben Sasse (R-NE).

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.

This is just one of many cases where the federal government has utilized wasteful or illegal subsidies and payments to keep Obamacare afloat.  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, and the law has provided more than $170 billion in corporate welfare payments to special interests.

The fact is, the $3.5 billion in Obamacare reinsurance corporate welfare payments are merely the latest effort by the administration to ignore the law to the benefit of monied special interests. Members of Congress should stop this latest cash grab and support Congressman Walker’s Taxpayers Before Insurers Act.

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