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Obamacare at Six: Six Ways the Administration Violated Its Own Health Care Law

This week marks the 6th Anniversary of Obamacare, so Ways and Means is spotlighting six ways the Obama Administration has flagrantly violated the letter and spirit of its own law.

Violation #1: Using Deficit Reduction Dollars to Pay Off Insurance Companies


Current law requires the Centers for Medicare and Medicaid Services (CMS) to deposit a certain portion of fees collected under Obamacare’s Transitional Reinsurance program into the Treasury for deficit reduction. Section 42 U.S.C. § 18061(b)(4) of the law explicitly prohibits CMS from using these fees to pay health insurance companies.

Despite the clear statutory prohibition, on February 12, 2016, CMS confirmed that as much as $2 billion for 2014 and $1.5 billion for 2015 would be diverted from the Treasury to make more generous payments to insurance companies through the Transitional Reinsurance Program. In doing so, the Administration made clear its plan to illegally use taxpayer dollars to pay off special interests.

Ways and Means Committee Chairman Kevin Brady (R-TX), Oversight Subcommittee Chairman Peter Roskam (R-IL), and Health Subcommittee Chairman Pat Tiberi (R-OH) last month called on the Administration to immediately return all diverted funds back to the Treasury. Instead, the Administration defended their violation of the law and doubled down on their intention to prioritize insurance companies over our nation’s fiscal health.

Violation #2: Unilaterally Rewriting Payment Formulas to Benefit Insurance Companies


Many insurance companies raised concerns that the President’s health care law would force them to insure sicker, older, and more expensive beneficiaries, negatively affecting their bottom line. To address these concerns, the Administration included two provisions in its Obamacare law: the individual mandate – which forces everyone to have health insurance or face a tax penalty – and three risk mitigation programs, including a risk corridor program – which provides payments to insurers who lose money on the exchange plans.

The Administration unilaterally changed the risk corridor payment formula to provide more money to insurance companies. Moreover, the Administration has promised to make participating insurance companies whole despite legal prohibitions. This is a blatant attempt to save the health care law by preventing insurers from exiting the exchanges.

To protect taxpayers from funding this open-ended bailout for insurance companies, Congress acted to ensure the risk corridor program used only collections from profitable health insurance companies to offset the payments to health insurance companies experiencing losses.

The Ways and Means Committee will continue to monitor the Administration to ensure taxpayers are protected from these power-grabs moving forward.

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

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.

Violation #5: Extending Non-Compliant Health Plans


We all remember the empty promise President Obama made to the American people when he was promoting Obamacare.“If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what,” he said.

We know how that worked out. In the Fall of 2013, millions of Americans received notices from insurance companies that their coverage would be cancelled for 2014 because their plan was found to be“non-compliant” with the President’s new law. Responding to the enormous public criticism, the Administration introduced a “transitional policy” that allowed non-compliant plans to remain in effect through 2014. The Administration encouraged states to adopt the same policy, which was again extended until the end of 2016.

In making this change, the Administration effectively ignored the statutory mandate that all plans meet Obamacare’s requirements after January 1, 2014. What’s worse, as a result of this miscalculated political maneuver, fewer people enrolled in the Obamacare exchanges, and the cost of compliant plans increased for both insurance companies and the public. In other words, the Administration not only undermined the law, it created the illusion of relief for American families before forcing them into expensive one-size-fits-all government mandated plans

The Ways and Means Oversight Subcommittee held a hearing last year examining this and other flagrant violations and continues to investigate the Administration’s disregard for its own law.

Violation #6: Delaying the Employer Mandate … Twice


Under current law, businesses that employ more than 50 full-time equivalent workers are required to offer health coverage to their workers or pay penalties beginning in 2014. Despite a statutory requirement for the employer mandate to go into effect on January 1, 2014, the Administration delayed the employer mandate. Not once, but twice.  

In a blogpost on July 2, 2013, the Treasury Department announced a delay for all employers in 2014 while also delaying employer reporting requirements that were critical for compliance and administration of the law’s subsidies. The employer mandate was later delayed again for all employers with fewer than 100 full-time employees. Just like violation #5, above, this illegal action is yet another example of how the Administration has chosen to implement the law it wishes it had written, instead of the actual law — passed by a Democrat-led Congress and signed into law by President Obama six years ago. 

Ways and Means members have been working to bring this and other illegal delays to light and have repeatedly called on the Administration to repeal the employer mandate and provide relief to America’s job creators. 

On the 6th Anniversary of Obamacare, with year after year of delay, modification, and outright disregard for the law, perhaps it is time for the Administration to work with Congress to replace Obamacare with something Americans actually want and can afford. 

While the Administration continues to peddle its failing law, House Republicans are working to develop a patient-centered health care system that improves access, choice, and quality; lowers costs; promotes innovation; and strengthens the safety net for the most vulnerable.