GAO says Obama administration can’t bail out insurers without Congress

From The Washington Examiner, By Philip Klein | September 30, 2014

HHSThe Department of Health and Human Services cannot legally bail out the insurance industry for excessive losses through President Obama’s health care law unless the U.S. Congress approves language allowing the administration to do so, according to a legal opinion released on Tuesday by the Government Accountability Office.

The ruling could end up provoking a showdown between the White House and Congressional Republicans over Obamacare that has the potential to affect health insurance premiums.

At issue is the “risk corridors” program, which aims to stabilize the insurance market on the new health insurance exchanges during the early years of Obamacare. Because the law requires insurers to offer coverage to those with pre-existing conditions and limits how much insurers can charge older and sicker patients, insurers who join the exchanges risk getting stuck with a disproportionate number of older and sicker beneficiaries, translating into losses that could discourage companies from participating.

In February, Sen. Jeff Sessions, R-Ala., and House Energy and Commerce Committee Rep. Fred Upton, R-Mich., sought clarification from the GAO as to whether the Obama administration even had the authority to use the general pot of money sent to the Centers for Medicare and Medicaid Services (the agency implementing the program for HHS) through the regular budget process to supplement any shortfall from the risk corridors program. On Tuesday, GAO responded that the administration does not possess that authority, and it requires Congressional cooperation.

More specifically, the legal opinion said that for the administration to dip into general CMS funds, whatever language Congress adopts in future appropriations to CMS must be the same as the language that was adopted for the 2014 fiscal year ending Sept. 30. That language enabled CMS to use appropriations for “other responsibilities” of CMS, which GAO said could include risk corridor payments.

In practice, what this means is that if Congress passes more restrictive language going forward, lawmakers could effectively block any risk corridor payments to insurers that exceed the money collected through the program from other insurers. Earlier this year, the Obama administration proposed making sure that the risk corridor program was budget-neutral (i.e. that payments were only made based on what was collected), and insurers mounted an aggressive lobbying campaign warning that this would drive up premiums. In response, CMS issued revised guidance promising insurers that if the pool of money were insufficient to cover insurer losses, the agency would find “other sources of funding for the risk corridors payments, subject to the availability of appropriations.”

In practice, this ruling may not make much of a difference. There’s no guarantee that Republicans will invite a confrontation with Obama over this, fearing that it would allow Democrats to shift blame to the GOP for any premium spikes that would result. The GAO opinion is not legally binding, and the Obama administration could simply choose to ignore it. It’s also possible that this won’t be an issue at all if — as the administration has insisted — payments collected from the program will be sufficient to cover any insurer losses. But the GAO opinion does provide more fuel to the argument of Republicans such as Sessions and Upton that the ultimate authority for covering any excess insurer losses rests with Congress.

Under Obamacare, the risk corridors program is scheduled to be operational for the 2014 through 2016 calendar years.

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2 responses

  1. Rosemarie Swaim | Reply

    And an Oklahoma Federal Judge has added to the negative rulings about the subsidies, tax credits. Without subsidies no one can afford these health insurance plans. My clients are going nuts. High deductibles, high costs, and tiny network of doctors.

  2. Senator_Blutarsky | Reply

    “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood.”
    –James Madison, Federalist No. 62

    This entire monstrosity is over-the-top, in-your-face UNCONSTITUTIONAL , and the House could have refused to fund it. And Chief Justice John Roberts was blackmailed (over his illegally adopted sons), in to voting FOR this. Indeed, he cast the deciding vote FOR Obamacare, or we would not even be having this discussion.

    So much for any “Red State” nonsense talk when the rubber meets the road – the Republicans are equal partners in crime with their evil twin, the Dimocrats. And how nice of them to EXEMPT themselves (Congress) from the Orwellian clutches of this monstrosity.

    ” Banana Republic” is not a clothing store.

    “And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty.”
    – Frédéric Bastiat

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