Republicans Pick New ‘Insurer Bailout’ Fight

Senate Republicans are turning their focus back to an Obamacare program that aims to shield insurers from financial risk. Their efforts could build a case that the Obama administration does not have the legal authority to implement the program.

Republicans on the Senate Budget Committee circulated a memo Friday, obtained by Morning Consult, that urges the caucus to take another look at the Affordable Care Act’s “risk corridors” program and review whether it’s possible to block the administration from using the program as a “slush fund.”

“The Administration’s move to change the budgetary treatment of risk corridors is all about doing another end-run around Congress,” the letter reads in part. “It also suggests that in the absence of actual budget neutrality (which would require legislation enacted by Congress), HHS could raid other programs within CMS program management to fund a shortfall or use the program as another ‘slush fund to implement other portions of Obamacare.”

The Morning Consult reported last week that some Republicans believe they’ve identified a poorly structured aspect of the healthcare law that could provide an opening for a legal challenge.

The Affordable Care Act (ACA) created a temporary pool of money – the risk corridors– to reimburse insurers who enroll a higher-than-expected number of sick patients in the first two years of the healthcare law.

The program is meant to ease the transition for insurers worried about the inherent risks of universal coverage. Insurers with better-than-expected results pay into a fund, with the understanding that HHS will redistribute that money to insurers that underperform because they got stuck with sicker-than-average enrollees.

But a Congressional Research Services memo from January argued that because there’s no appropriations language for the program, which Republicans have decried as an “insurer bailout,” that Health and Human Services (HHS) has no authority to reimburse insurers who perform poorly in the early years of the law.

The nonpartisan Congressional Budget Office (CBO) has said that the government would collect $16 billion from insurers between 2015 and 2017 for the program, but only pay out $8 billion, netting the government $8 billion over that time.

However, the CRS memo further argued that the administration couldn’t dip into the federal treasury if it comes up short on collections, and that even if it does receive matching collections, that HHS still has no authority under the law to distribute money from a revolving fund.

Friday’s Senate Budget Committee memo references a new CRS memo, sent to the committee on May 2, that backs up these findings, while acknowledging “there are several factors” that could lead to a different interpretation.

The Senate Budget Committee is pressing for a review of the law to determine whether Congress must pass an appropriations bill for HHS to have access to these funds.

“The Administration has requested an appropriation for the program that would provide the Secretary of Health and Human Services with broad discretion into how funds for the risk corridor program are managed,” the memo continues. “How Congress handles the Administration’s request will have significant implications for the financing of the health care law.

Rep. Jack Kingston (R-Ga.), the chairman of the House Appropriations Subcommittee on Labor and Health and Human Services, told Morning Consult last week he would never consider passing legislation to fund the risk corridors.

Morning Consult