Republicans Question Legality of Obamacare Payments to Insurance Companies

Barack Obama, Kathleen Sebelius, Sylvia Mathews Burwell / AP

Republicans are questioning the legality of the risk corridor program under Obamacare, which could pay insurance companies billions to compensate for higher costs under the health care law.

Senate Budget Committee Ranking Member Jeff Sessions (R., Ala.) and House Energy and Commerce Committee Chairman Fred Upton (R., Mich.) sent a letter to Health and Human Services (HHS) Secretary Sylvia Burwell on Tuesday, asking whether her agency has the statutory authority for the risk corridor program, which some have called a bailout of the insurance industry.

"Under current law, payments made under the risk corridor program would constitute an unlawful transfer of potentially billions of taxpayer dollars to insurers offering qualified health plans under the president’s health care law," Sessions and Upton Wrote.

The lawmakers argue that Obamacare did not specify a source of funding for the program, making it illegal for HHS to distribute payments unless authorized by Congress.

"HHS may not make payments under Section 1342 absent additional congressional action appropriating funds for such payments," they wrote.  "Without an explicit appropriation, any money spent on the risk corridor program would be based on an illegal transfer of funds and your agency could be held in violation of the Antideficiency Act."

The letter raises concerns that HHS has "left open the possibility that it will make payments to health insurance companies under the risk corridor program without seeking additional funding from Congress."

Sessions and Upton asked Burwell for any legal analysis that HHS has prepared for making payments to insurance companies, and to provide a list of all funding sources that the agency believes it can use legally for the program.