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Obamacare at Six: Six Ways the Administration Violated Its Own Health Care Law (Cont’d)

March 22, 2016

This week marks the 6th Anniversary of Obamacare. Yesterday, the Ways and Means Committee kicked off a blog series spotlighting the first two of six ways the Obama Administration has flagrantly violated the letter and spirit of its own law.

Below are the next two violations in the series:

Violation #3: Paying Insurance Companies with Unappropriated Funds to Maintain the Law’s Cost-Sharing Reductions

Current law requires insurance companies to modify the design of their benefits and reduce co-payments, deductibles, and other out-of-pocket costs for qualified beneficiaries. To offset these costs, the Administration is authorized to make payments – known as Cost Sharing Reduction (CSR) payments – to insurance companies.

While the law authorizes the CSR program to make payments, the Constitution requires that Congress expressly appropriate funds to be used before Administration can legally make any payments to insurers. As the Constitution requires, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Administration has no constitutional or statutory authority to spend taxpayer funds that Congress has not appropriated.

To date, Congress has not appropriated any funds for CSR payments.  In fact, the Administration asked Congress for an appropriation, but Congress rejected it. Despite this, HHS Secretary Sylvia M. Burwell admitted to making these payments without Congressional consent. During calendar years 2014 and 2015, HHS and the Department of the Treasury paid insurers approximately $7.171 billion, and continue to make these payments to insurers in violation of the Constitution. These payments are estimated to total over $136 billion over the next 10 years.

In response to this executive overreach, the Committee has subpoenaed the Treasury Department for documents and its officials for testimony, and continues to investigate the Administration’s decision to illegally spend billions of taxpayer dollars on CSR payments to insurers without a Congressional appropriation.

Violation #4: Sending Unappropriated Funds to States to Create and Maintain the Law’s Basic Health Program

Under current law, states are permitted to contract with insurers to provide health coverage to individuals whose incomes are too high for Medicaid. Known as the Basic Health Program (BHP), these plans are intended to provide states with a state-run option for providing coverage for their residents.

Rather than send payments directly to insurance companies, the federal government reimburses states up to 95 percent of what would have been paid to insurance companies had the individual enrolled in a private health care plan through the Obamacare exchange, rather than through the BHP.

While the law authorizes the BHP,  just like with violation #3 above, the Constitution requires an appropriation be enacted before the Administration can actually make any payments. To date, the Administration has not asked for, and Congress has not appropriated, any funds for the BHP. Instead, in an effort to circumvent the Constitution, the Administration, as it did with the CSR payments, is paying for the program through an appropriation for IRS refunds and credits, including the premium tax credit — an account explicitly restricted for that purpose only. As such, the Administration’s payments to the states are unlawful.

The Ways and Means Committee has continued to investigate the Administration’s decision to fund the BHP without an appropriation and called on the Administration to immediately cease the funding and submit an appropriation request, as required by the Constitution.

Tune in tomorrow for two more ways the Obama Administration has broken its own law.

To read yesterday’s blog post on the Transitional Reinsurance program and risk corridor program, click here.