House Republicans Warn Against Obama Administration’s Attempt to Bailout Obamacare Insurers

Senator says if administration doesn’t follow the law, the chance of a bailout is quite high

September 27, 2016

More than 40 House Republicans have warned the Obama administration against bailing out Obamacare insurers who have lost money on the exchanges, telling the secretary of Health and Human Services that Congress would closely scrutinize any such effort.

The Obama administration released a memo earlier this month with details about the Affordable Care Act’s so-called "risk corridor program," which was designed to transfer funds from profitable insurers to insurers with losses.

According to the agency, the program experienced a shortfall of more than $2.5 billion in 2014, an amount so large that all of the risk corridor payments from 2015 would not cover it. Because all of the 2015 benefit year collections will be used for the 2014 shortfall, the agency anticipates that no funds will be available for the 2015 risk corridor program shortfall.

"In the event of a shortfall for the 2016 benefit year, HHS will explore other sources of funding for risk corridors payments, subject to the availability of appropriations," the memo said. "HHS will record risk corridor payments due as an obligation of the United States government for which full payment is required."

House Republicans sent a letter late last week to Secretary Sylvia Burwell of the Department of Health and Human Services saying they would scrutinize any attempt for a possible bailout of these insurers.

"To ensure the program does not become an uncapped bailout fund for insurance companies, Section 225 of Public Law No: 114-113 explicitly prohibits any appropriated funds from being used to make risk corridors payments," the lawmakers wrote.

The agency memo also mentioned that insurers have sued in federal court to obtain payments.

"Any attempt to settle these cases out of court as a backdoor way to direct taxpayer dollars to insurance companies through the Judgment Fund will be met with the strictest scrutiny from Congress," the lawmakers warned Burwell.

Sen. Ron Johnson (R., Wis.) told the Washington Free Beacon that the chance of an Obamacare bailout would be quite high if the Obama Administration doesn’t continue to follow the law.

"This wouldn’t surprise me if the Obama administration doesn’t follow the law you know the chance [of a bailout] will be quite high," he said. "The risk-corridors were all about, some insurers would be lucky, some would be fortunate, some would be unfortunate, some would make a lot of money, others would lose money—so you take from the successful and redistribute it to the unsuccessful."

"Supposedly, after three years all of these insurance plans, the marketplace, would work its way out and everything would come up roses, well that hasn’t occurred," Johnson continued.

"The death spiral is already occurring. They’re just trying to halt the death spiral."