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Republicans warn ObamaCare rule tweak could trigger taxpayer bailout of insurers

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FILE: Nov. 26, 2013: Dr. Stephen Hippler treats a patient at his office in Peoria, Illinois. (REUTERS)

Top congressional Republicans warned the Obama administration Tuesday it risks violating federal law if it proceeds with a backup plan to transfer "potentially billions" in taxpayer dollars into ObamaCare to bail out insurance companies.

The Affordable Care Act was originally signed into law with a provision that allows the government to cover insurers that lose money by paying them from a pool of cash collected from insurers that turned a profit.

However, administration officials made a rule change in May to the so-called "risk corridors" program that, Republicans say, would allow them to use taxpayer funds from other federal programs -- GOP lawmakers say that's a decision only Congress can make.

“It is plain that under current law, the Obama administration does not have the ability to divert money from programs that Congress has funded,” Alabama Sen. Jeff Sessions, the top Republican on the Senate Budget Committee, told FoxNews.com in a statement. “Congress alone was given the power of the purse -- the power to appropriate funds. Yet again, the administration is circumventing Congress and seeking to write its own laws." 

The change comes amid concerns that insurance companies participating in ObamaCare could soon announce double-digit rate hikes because they had to insure more high-risk customers this year than expected. Premium spikes stand to hurt Democrats seeking reelection this year. But the latest regulatory tweak could effectively guarantee that the federal government will offset their losses -- making premium hikes less necessary. 

The May regulation states that HHS would use “other sources of funding … subject to the availability of appropriations” if necessary to make up for any “shortfall." 

Sessions and Michigan GOP Rep. Fred Upton, chairman of the House Energy and Commerce Committee, told newly confirmed Health and Human Services Secretary Sylvia Matthews Burwell in a letter on Tuesday that executing the new rule “would constitute an unlawful transfer of potentially billions of taxpayer dollars to insurers.”

HHS spokeswoman Erin Shields Britt told FoxNews.com on Tuesday that the non-partisan Congressional Budget Office has not projected a deficit for the three-year-long risk corridor program and that the agency was “confident” about not having a shortfall.

She also said the payments under the program are “set by law and regulation” and “like any authorized program, HHS may use available appropriations to make payments consistent with these rules.”

The insurance industry is defending the program. 

ObamaCare's "temporary risk mitigation programs are designed to help ensure market stability and affordability for consumers," American's Health Insurance Plans spokesman Brendan Buck said Tuesday. "The final rule provides important clarity about how these insurer-financed programs will work as health plans prepare their rates for 2015."

Sessions' and Upton’s letter also states that HHS could be held in violation of the Antideficiency Act for making such transfers. The law was enacted by Congress in the late 1880s to keep the federal government from entering into contracts that were not already fully funded by an appropriation.

However, the lawmakers also state the agency has yet to make clear whether it thinks an appropriation has already been made. They are asking HHS to provide by June 24 all related legal analysis and a list of all funding sources “legally or otherwise” it thinks it has for funding the program, absent an appropriation.