Is the “Insurance Bailout” Back?

Back in November, Republicans honed in on a new line of attack on the Affordable Care Act.

In the midst of the disastrous rollout of the health insurance exchange websites, the GOP not only got to frame Obamacare as broken and impossible to implement, but also leapt at the chance to paint it as a corrupt handout for one of the least popular parts of the health sector – insurance companies.

Republican criticism of Obamacare as an “insurance bailout” comes from the risk corridors program, a temporary pool of money in the law that exists to reimburse insurers who enroll a higher-than-expected number of sick patients.

The program, which runs until 2017, is meant to ease the transition for insurers worried about the cost of covering people with pre-existing conditions. Insurers with better-than-expected results pay into a fund, with the understanding that the federal government will redistribute that money to insurers that underperform because they got stuck with sicker-than-average enrollees.

With 8 million plus enrollees on the exchanges and a Congressional Budget Office estimate that the “bailout” would actually make the government $8 billion, the momentum behind the challenge stalled out over the past few months.

But a little-noticed Congressional Research Service (CRS) memo from Jan. 23 has given Republicans hope that there’s still life in this Obamacare attack, just in time for the midterm elections.

The CRS found that the Obama administration does not have the authority to collect and disperse money for the risk corridors program. They need Congress to pass a bill giving them explicit power to set up an account for the money.

“While the language of ACA…establishes a directive to the Secretary to make such payments, it does not specify a source from which those payments are to be made,” the CRS memo reads in part. “Therefore, [it] would not appear to constitute an appropriation of funds for the purposes of risk corridor payments under that section.”

Of course, House Republicans aren’t considering passing such legislation. Rep. Jack Kingston (R-Ga.), the chairman of the House Appropriations Subcommittee on Labor and Health and Human Services, told Morning Consult it was something he would never do.

“The confusion surrounding the insurance company bailouts in Obamacare is a result of the law being written behind closed doors, rushed through the Senate on Christmas Eve, and now illegally implemented by President Obama because Senator Reid refuses to enforce the law as written,” Kingston said in a statement.

“My committee will continue to deny funding for the implementation of this harmful law, its insurance company bailouts, its increased costs for families, and its job-destroying policies,” he added.

The administration hasn’t had to sweat this legal technicality yet.  They got a boost when the CBO found that the government would collect $16 billion from insurers between 2015 and 2017, but only pay out $8 billion, netting the government $8 billion over that time.

But this doesn’t settle things in Republicans’ minds. The CRS memo goes further, arguing that even if the administration does receive matching collections, HHS has no authority under the law to distribute money from a revolving fund.

“The amounts received by HHS from plans that have overestimated premiums for a given year are not explicitly designated to be deposited in a revolving account or otherwise made available for outgoing payments,” the memo says. “Therefore, there does not appear to be sufficient statutory language creating a revolving fund that would make amounts received…available to pay amounts due to eligible plans.”

The memo states that the revolving fund would have to be “established by Congress,” something that Kingston and company have no intention of doing.

Republicans have taken notice of this argument.

The House Energy and Commerce committee is closely monitoring developments around it, according to an aide. And Rep. Andy Harris (R-Md.), a member of the House Appropriations Committee, said he would be meeting with his committee colleagues about the memo this week.

Greg Dolan, a spokesman for Kingston, said HHS’s authority to dole out the funds it takes in remains a matter of dispute.

“We have asked for clarity on that from HHS and their explanations have been lackluster at best,” Dolan said.

He called HHS’s authority to disburse funds from a revolving account an “assumption” made by the administration that his boss’s committee didn’t necessarily share.

Officials at the White House and HHS did not return requests for comment.

With the insurance payments program only lasting a few years, perhaps this criticism of the Affordable Care Act will die out with the many others that have been lobbed at it. But as challenges to contraception coverage and federal exchanges subsidies have shown–both of which are working their way through the nation’s highest courts now–what starts out as a narrow reading of the law can blossom into a serious legal threat.


Morning Consult