Health

The Unlawful Funding of Obamacare

Taxpayers are robbed to reimburse insurers. Thanks, Mr. President!

The numbers are staggering — and taxpayers, you’re footing the bill.

“The administration chose to bilk the taxpayers to keep health insurers in the game.”

A new investigation has turned up more evidence that the Centers for Medicare and Medicaid Service unlawfully diverted $3.5 billion from taxpayers to the Affordable Care Act exchange insurers.

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The notion of diverted money came up earlier this year, when the nonpartisan Congressional Research Service issued a memo claiming that distributing the money to insurers instead of the U.S. Treasury violated the ACA. Department of Health and Human Services Secretary Sylvia Mathews Burwell contended that her agency and the CMS had the statutory authority to defer payments to insurers.

The new documents were published by Boyden Gray, a former White House counsel and ambassador. The Galen Institute, a nonprofit public policy research organization in Alexandria, Virginia, released the report.

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“Mr. Gray’s letter reinforces the conclusion of legal experts at the [CRS] who found that the administration’s actions ‘would appear to be in conflict with the plain text’ of the Obamacare statute,” Grace-Marie Turner and Doug Badger said in an article published by Forbes. Turner is president of the Galen Institute, while Badger is a senior fellow.

Gray’s letter adds more evidence to previous claims that the CMS owes the Treasury $3.5 billion from the transitional reinsurance program — $2 billion for 2014, and $1.5 billion for 2015.

Gray stated that by the time the TRP’s books close at the end of 2016 for the 2014 and 2015 benefit years, eligible insurers will likely have received 98 percent of expected payments ($15.6 billion out of an expected $16 billion), and the Treasury will likely have received 12 percent of expected payments ($495 million out of an expected $4 billion).

[lz_bulleted_list title=”Insurers’ Losses” source=”Mercatus Center”]Companies selling ACA plans in the individual market lost more than $2.2 billion, despite receiving $6.7 billion ($833 per enrollee, on average) in reinsurance subsidies.[/lz_bulleted_list]

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“CMS picked up the entire cost of medical claims between $45,000 and $250,000 for individuals enrolled in Obamacare individual policies in 2014, relieving insurers of the burden of paying these high medical bills,” Badger and Turner wrote.

“When these collections came up $3.5 billion short over the first two years, CMS made a fateful and unlawful decision: The agency decided to fleece taxpayers in order to pay insurers.”

“The administration chose to bilk the taxpayers to keep health insurers in the game, even as the billions of dollars they are receiving through the TRP and other subsidies are inadequate to stem their losses for coverage they are offering in the Obamacare exchanges,” Badger and Turner wrote.

Americans Need to Know
Not enough Americans know about this illegal action — and they need to, because it involves misuse of their taxpayer dollars, said David Williams, president of the Taxpayers Protection Alliance in Washington, D.C.

“Obamacare is failing on multiple levels. A lot more money is going out than coming in,” he told LifeZette. The ACA may not have passed if it originally showed how much money would be needed to sustain it. They were backed into a corner, he said.

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“We’re starting to see those problems surface,” Williams said. Taxpayers shouldn’t expect to see a refund from the diverted money, he added.

People going after the administration are not necessarily trying to repeal the ACA, he said — they just want the administration to be accountable for breaking the rules. That’s something all taxpayers should understand, regardless of political affiliation.

“This is corporate welfare,” Williams said. “Both political [parties] are paying for it. This is not helping the health care system.” He added, “Most people aren’t hearing this. I’m afraid not enough people know about this problem.”

“As with many aspects of Obamacare, people simply don’t know what’s happening,” Badger noted. “They have no idea that money has been taken out of their health plans — money that was supposed to pay medical expenses for themselves and their families — and used to try to keep insurers from dropping out of Obamacare. Nor do they know that a portion of this money is being stolen from Treasury. ”

Badger added: “Obamacare is so big and complicated that even experts on the law didn’t recognize this theft until quite recently. ”

What’s Next?
Democrats will say the payments to insurers were necessary because they had such large losses, Brian Blase, a senior research fellow at George Mason University’s Mercatus Center in Arlington, Virginia, noted. But policies were broken and it was clear the money was diverted unlawfully.

“This is corporate welfare. Both political aisles are paying for it. This is not helping the health care system,” said Williams.

Republicans may try to hold hearings — one Republican senator has introduced a law in an attempt for justice — but Blase said he is not sure Americans have any recourse. Even if a law is passed, the president isn’t likely to sign it, Blase explained.

“I think it just fits with the pattern of the administration failing to follow the law in implementing the ACA,” he said. “They often skirt or ignore the law.”

In April, Sen. Ben Sasse, introduced the Taxpayers Before Insurers Act that would force the Obama administration to deposit $5 billion in the Treasury by 2017 — or risk facing steep cuts to the HHS budget.

“HHS must stop cheating taxpayers,” Sasse said in a statement. “Our legislation is simple: If HHS ignores the law to reward insurance companies, Congress will slash their operating budget,” Sasse added.

Badger told LifeZette that the House Energy and Commerce Committee is on the verge of issuing a subpoena to obtain documents on how CMS “came to reverse itself in a 10-day period, adopting the policy of diverting money from Treasury.”

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