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GAO: HHS Lacks Funding Authority in Obamacare to Cover Insurer Losses

The nonpartisan government watchdog Government Accountability Office (GAO) confirms the Congressional Research Service conclusion that Department of Health and Human Services “has no legal authority to disburse risk corridor payments under Obamacare absent a congressional appropriation,” said Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee. House Energy and Commerce Committee Chairman Fred Upton (R-MI) stated, “Following the law matters. . . Today’s report sounds the alarm once again on the administration’s efforts to unlawfully subsidize its health care law with taxpayer dollars. American taxpayers are already on the hook for a still-incomplete health exchange with a price tag that exceeds $2 billion.”

Background

The risk corridor program limits the profits or losses that an ObamaCare-participating insurer can accrue. If an insurer’s allowable costs exceed the total premiums received (less administrative costs) for a qualified health plans (QHP), the Secretary is required to pay the insurer a percentage of the shortfall in premiums. In contrast, if an insurer’s allowable costs are less than the total premiums received (less administrative costs), the insurer is required to pay to the Secretary a comparable percentage of the excess premiums received. The ACA did not include an appropriation to make the payments to the qualified health plans.

In the President’s FY 2015 budget, HHS quietly tried to reclassify risk corridor funds in such a way that would have allowed them to disburse money without being subject to the oversight of the congressional appropriations process

Full GAO legal opinion: http://www.gao.gov/products/B-325630

Congressional Research Service memo:
http://www.budget.senate.gov/republican/public/index.cfm/files/serve/?File_id=bb651aa1-bba4-443a-b4a1-f7d0e0acb30b

[Courtesy Marilyn Singleton, MD, JD]
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