The Obama administration failed to follow its own health care law by directing funds to insurers instead of taxpayers, nonpartisan government investigators said Thursday, delivering a win to GOP critics and denting the White House’s ability to satisfy insurers who are losing money under the overhaul.
The Affordable Care Act established a three-year “reinsurance” program to collect funds from participating insurers and then pay a portion to plans that took on costlier enrollees, so the companies wouldn’t have to raise their premiums to make up their losses.
The Health and Human Services Department was also supposed to allocate a chunk of the money to the general fund, yet when collections fell short of expectations, “the agency impermissibly chose to interpret the statute in a manner that ignored the statutory requirement to collect funds for the Treasury,” wrote Susan A. Poling, general counsel at the Government Accountability Office.
The reinsurance program was supposed to take in $25 billion for 2014-2016, with $5 billion of it designated for the Treasury.
Faced with a shortfall, HHS prioritized payments to insurers, angering Republicans who said the agency put its contentious program over taxpayers, who got an IOU.
“The fact that HHS’s collections ultimately fell short of the projected amounts does not alter the meaning of the statute,” Ms. Poling wrote.
Republicans who’d requested the investigation took a victory lap.
“This new opinion from the government’s top watchdog confirms that the Obama Administration is not above the law. The administration needs to put an end to the Great Obamacare Heist immediately,” the chairmen of seven Senate and House committees said.
The GAO conclusions are another setback for President Obama, who is trying to put his signature law on firmer footing before he leaves office.
Major insurers have withdrawn from the program, citing a costlier-than-expected customers base and shortfalls in payments designed to mitigate their losses.
For its part, the administration said the 2010 health care law is silent on what the Centers for Medicare and Medicaid Services should do if reinsurance collections fall short of estimates. It says the agency worked within its authority.
“CMS has implemented the Transitional Reinsurance Program lawfully and in a transparent manner, and strongly disagrees with today’s GAO opinion,” HHS spokesman Matthew Inzeo said. “This critical program, which expires this year, helps to reduce premiums for consumers. CMS laid out its approach to implementing the reinsurance program, including describing the legal rationale, through regulations that involved a public notice-and-comment process.”
HHS expects to bring in $7.7 billion for the 2015 plan year and make a $500 million payment to Treasury.