The Obama administration has been caught — once again — seeking to circumvent the law related to Obamacare by diverting billions in funds intended for the U.S. Treasury to cover private insurance companies’ losses.
In 2014, Sen. Marco Rubio inserted language into the omnibus spending bill which specifically barred the Department of Health and Human Services from dipping into the general funds of the Treasury to bailout failing insurance companies, the Washington Post reported.
Marc Thiessen, writing for the Post, observed that the provision is “quietly killing” Obamacare, while the New York Times headlined in December, “Marco Rubio Quietly Undermines Affordable Care Act.” The Hill called the provision, “the biggest blow in the GOP’s five-year war against Obamacare.”
Both the Post and the Times pointed out that private insurers have been taking heavy losses participating in the healthcare exchanges, and to entice them to stay, the Obama administration was subsidizing the companies with taxpayer dollars.
According to the Times report, in 2014 “insurers lost $2.9 billion more than expected on Obamacare…Thanks to Rubio’s provision, the administration was allowed to pay only 13 cents of every dollar insurers requested. Without the taxpayer bailouts, more than half of the Obamacare insurance cooperatives created under the law failed.”
Several insurers have pulled out of the remaining exchanges. United Healthcare and Aetna, two of the nation’s largest providers, have indicated they are considering pulling out of Obamacare altogether, due to the billions in losses they have sustained.
As a means of mitigating the disastrous financial impact of the law on insurers, the Obama administration announced earlier this month it will hand out $7.7 billion to companies from fees collected through the ACA. The only problem is $2 billion of that money is supposed to go the Treasury’s general funds.
Doug Badger, a senior fellow with the Galen Institute, writes the “reinsurance fee” is $107 for every man, woman and child with a private health plan, which adds up to billions in collections each year.
“The law states a fixed share ‘shall be deposited into the general fund of the Treasury of the United States and may not be used’ to offset insurance companies’ losses. But the administration gave all of it to the insurance companies last year, and got away with that heist. So they’re trying it again,” Betsy McCaughey wrote in Investors Business Daily.
According to Badger, the amount the Treasury is supposed to receive — but won’t because the Obama administration has directed it be paid to private insurers — is $3.5 billion over the two years.
The Daily Signal reported Thursday that the House Energy and Commerce Committee is investigating the multi-billion dollar transfer of taxpayer money.
“[Earlier this month], the administration announced that they would be using billions of taxpayer dollars to make payments to insurance companies under the Obamacare reinsurance program,” Rep. Joe Pitts, R-Penn., a member of the committee said Wednesday during a hearing with Department of Health and Human Services Secretary Sylvia Mathews Burwell. “The announcement that the administration made represents an illegal wealth transfer from hardworking taxpayers to insurers.”
The Ways and Means Committee has also taken up the issue. Committee Chairman Kevin Brady, R-Texas; Subcommittee on Oversight Chairman Peter Roskam, R-Ill.; and Subcommittee on Health Chairman Pat Tiberi, R-Ohio, asked Burwell for documents related to the reinsurance program in a letter sent Feb. 9.
“It appears that the administration has illegally diverted funds from the U.S. Treasury to fund the transitional reinsurance program established by the Patient Protection and Affordable Care Act,” they wrote. “Not only is this diversion inconsistent with past policies promulgated by the administration but it is incompatible with clear congressional instructions contained within the ACA. We ask that HHS immediately submit to the Treasury all diverted funds.”
The Obama administration’s diversion of funds is just the latest example of changing provisions of ACA without congressional approval. Other instances included delaying implementation of the employer mandate twice, delaying the individual mandate for two years, and not creating a means to adequately verify whether those signing up were actually eligible for health care subsidies.