Issues

Sasse Hits Program Diverting Money From Treasury to Insurance Companies

Introduces legislation to penalize HHS for prioritizing big insurance companies over taxpayers

Ben Sasse
Ben Sasse / AP

Sen. Ben Sasse (R., Neb.) is taking aim at an Obamacare program that is diverting billions of dollars in payments away from the U.S. Treasury and steering the money to major insurance companies involved with the health care law.

Sasse recently introduced legislation tackling the Transitional Reinsurance Program, one of three programs in Obamacare put into place to protect insurance companies from risks that could arise from entering the marketplace.

Under the reinsurance program, if an individual were to have an Obamacare-compliant plan and accrued medical costs between $45,000 and $250,000, HHS was slated to pay 80 percent of the large claims total back to the insurance companies.

However, HHS later announced that they were going to raise the payment rates for the insurance companies to 100 percent.

The secretary of HHS, under the law, is required to deposit a total of $5 billion between 2014 and 2016 to the Treasury. This amount was supposed to consist of a $2 billion payment in 2014, a $2 billion payment for 2015, and a $1 billion payment for 2016.

Treasury did not receive a single payment out of the $2 billion that they were supposed to receive in 2014, while the insurance companies were given the full $8 billion that they requested. Additionally, HHS carried over $1.7 billion to have on hand to give to insurance companies at a later time.

HHS said it would give Treasury $500 million out of the $2 billion owed for 2015 and that the insurance companies will receive a payout of $7.7 billion. This includes a $6 billion payment for 2015 and the $1.7 billion that was carried over from 2014.

On Feb. 29, 2016, Sen. Sasse wrote to HHS demanding that the full amount "be deposited into the general fund of the U.S. Treasury before any additional amounts are paid to the insurance companies."

HHS responded to Sasse’s letter by saying they are putting the insurance companies ahead of taxpayers.

"CMS would allocate contributions that are collected first to the insurance payment pool and administrative expenses. … Once those targets were met the remaining contributions collected for that benefit year would be allocated to the U.S. Treasury," HHS said.

Sasse introduced the "Taxpayers Before Insurers Act" in response. If approved, the legislation would cut 50 percent of HHS’ general departmental management fund unless HHS were to pay the full amount that is owed to the taxpayers.

"HHS must stop cheating taxpayers. The reinsurance program is a clear case of Washington’s cronyism: families are suffering Obamacare’s consequences but Washington bureaucrats are sending billions of dollars to well-connected insurance companies," Sasse said. "Our legislation is simple: if HHS ignores the law to reward insurance companies, Congress will slash their operating budget. HHS must follow the law."

Sasse said during a media call Thursday hosted by the Freedom Partners Chamber of Commerce that taxpayers are being cheated out of their money.

"HHS is cheating taxpayers because the law is clear that the general fund is supposed to be receiving $2 billion for 2014, $2 billion in 2015, and another $1 billion this year," he said. "So far, HHS has only planned to pay $500 million out of the $4 billion up to this year."

Sasse also said the actions taken by HHS are a violation of the law.

"They’ve made an announcement of a plan to violate the law," he said. "They’ve announced that they don’t plan to pay the Treasury now, but they do plan to pay the insurers."

HHS did not return a request for comment.