Obama Administration Is Illegally Diverting Billions to Insurance Companies

Michael F. Cannon

A government watchdog has determined the Obama administration is violating its own health care law by illegally diverting up to $5 billion to private insurance companies participating in Obamacare.

The U.S. Government Accountability Office is the nonpartisan federal watchdog that determines whether federal officials are spending taxpayer dollars in accordance with the law. In a legal opinion issued last week, the GAO accused the Obama administration of illegally diverting billions of taxpayer dollars to private insurance companies.

The opinion concerned the administration’s implementation of Obamacare’s “reinsurance” program, one of several insurer bailouts designed to prop up Obamacare’s rickety finances.

Generally speaking, the reinsurance program taxes consumers in non-Obamacare plans to subsidize insurers who sell Obamacare plans. The program collects $25 billion from consumers, with $20 billion going to Obamacare-participating insurers and $5 billion to the federal treasury. The law is specific: the amount that each health insurance issuer pays toward the $5 billion designated for the U.S. Treasury “may not be used for the [reinsurance] program.”

But once insurance companies participating in Obamacare’s Exchanges started suffering huge losses and heading for the exits, the administration began funneling them the money that was supposed to go to the Treasury. The administration has so far diverted $3 billion — and counting.

If the rule of law means anything, it is that the government is as bound by law as are the people.

The Obama administration claims it is complying with the law, but the GAO disagreed in the strongest terms, pointing out that the administration’s actions are “inconsistent with the plain language of the statute.”

The administration’s interpretation is “internally inconsistent,” the GAO found, and “focuses on words and phrases in the statute in isolation rather than in their appropriate context” — which, ironically, is what the administration falsely accused its critics of doing in King v. Burwell.

The GAO went so far as to say the administration invented nonsense legal arguments because Obamacare isn’t working the way it had hoped. “HHS’s [legal] position,” the watchdog wrote, “appears to be driven solely by the factual circumstances present here, namely, lower than expected collections.”

The GAO’s ruling should end the matter. “Generally,” the Associated Press reports, “lawmakers of both parties respect GAO’s rulings on federal budget issues.” Yet, this is Obamacare we are talking about.

The administration is making so many unauthorized payments to private insurance companies participating in Obamacare that it’s hard to keep them straight. Both the administration and the Supreme Court acknowledge that the operative text of the Affordable Care Act forbids certain payments to insurers participating in federally-run exchanges. The administration is paying tens of billions of dollars to such insurers because it was able to convince the court to bless those payments anyway. It is making payments to insurers on behalf of exchange enrollees who are categorically ineligible for subsidies because they have incomes below the poverty line. It is paying insurers tens of billions of dollars in illegal “cost-sharing” payments that a federal judge ruled “violate the Constitution.” It is attempting to skirt a congressional ban on $2.5 billion in “risk corridor” payments to insurers that President Obama himself signed into law. It is even making illegal payments to insurance companies on behalf of members of Congress and thier staffs — giving Congress its own special exemption from Obamacare.

Consistent with past practice, the Obama administration is thumbing its nose at the nonpartisan GAO by announcing it will continue to divert these taxpayer funds to insurance companies.

If the rule of law means anything, it is that the government is as bound by law as are the people. If the people come to believe that the government is not, they will rightly conclude neither are they.

If President Obama, or his successor, wants more money for Obamacare, the only lawful course is to ask Congress for it. For now, for the sake of the American people, the Obama administration needs to stop making illegal payments to insurance companies.

Michael F. Cannon is director of health policy studies at the libertarian Cato Institute, and the “intellectual father” of King v. Burwell.

Source: http://www.cato.org/publications/commentary/obama-administration-illegally-diverting-billions-insurance-companies