Congressional Republicans called on new Health and Human Services Secretary Sylvia Mathews Burwell to reveal whether her agency plans to make an “unlawful” payments under an Obamacare program that protects against insurer losses — a provision the GOP has derided as a “bailout.”
Rep. Fred Upton, Michigan Republican and chairman of the Energy and Commerce Committee, and Sen. Jeff Sessions, Alabama Republican, told Mrs. Burwell in a letter Wednesday they are worried the Obama administration will pay out money to insurers without Capitol Hill’s blessing.
“Despite the overwhelming factual record that should foreclose any such efforts, HHS has left open the possibility that it will make payments to health insurance companies under the risk corridor program without seeking additional funding from Congress,” they wrote.
If a company’s medical claims exceed anticipated costs, the obscure safety net, known as the “risk-corridor” program, reimburses a share of those costs. It’s one of a few programs included in Obamacare to alleviate the risks to insurers between now and 2016 as they embrace the new reforms.
The Republican letter said while Obamacare authorizes the risk corridor program, “the provision does not specify a source of funding for the program” and it is subject to an appropriation from Congress.
The lawmakers pointed to a May rule that says in the unlikely event the risk corridor runs a deficit, HHS is prepared to use alternate sources of funding to cover the cost. Republicans characterized that as an “illegal transfer of funds.”
The GOP is hoping to rally populist anger by portraying the program as a “bailout” — a politically loaded term after the government rescued banks and auto manufacturers during the 2008-2009 financial collapse.
The risk-corridor program kicks in when claims outpace projected costs by at least 3 percent. In that case, the government reimburses the insurers for half of the excess costs. If claims exceed anticipated costs by 8 percent or more, the government picks up the tab for 80 percent of additional costs.
But the government also takes in money from insurers that end up with healthy risk pools, redistributing some of it to insurers that did not fair as well.
Democrats point to audits that suggest the government will come out on the positive side, while the administration says it is confident the program will not create a budget shortfall.