What to Expect in the Lame Duck: Obamacare Bailouts?

Passing legislation funding the government is not the only issue facing Congress when it returns for the “lame duck” session.  For example, Congress will also need to stop the Obamacare bailout. The law, which even Bill Clinton calls “crazy”, sets up programs to reimburse insurance companies who lose money participating in Obamacare exchanges.

One is the “risk corridor” program, which is supposed to be funded by a “fee” (tax) imposed on insurance companies whose profits exceed expectations. Surprisingly, not enough insurance companies are paying the “you did better than expected participating in our crazy program” tax to cover payments. So the Obama administration wants to use federal revenue (re: taxpayer funds) to cover the program’s loses. For the past two years, Congress has successfully added riders requiring the risk corridor program to be “revenue neutral”– that is, not spend any more than it collects (an odd principle I know). For more on the risk corridor program see here and here.

Since Congress has stopped the scheme to force taxpayers to bailout the insurance companies via the risk corridor program, the Obama administration has moved onto Plan B. Plan B is to use the Transitional Reinsurance Program to bailout the insurers. There is just one problem with it: it is illegal. (Oh forget that. When is that really a problem for this administration?) Like the risk corridor program this one is funded by a fee (tax) imposed on insurance companies. This fee is imposed on all insurance companies. The taxes are to be given to the US Treasury in order to cover some of the costs of Obamacare. However, the administration has been ignoring the written law (shocking I know) and has given the money to insurance companies to compensate them for their Obamacare-related losses.

Representative Mark Walker (NC-06) and Senator Ben Sasse have introduced the Taxpayers Before Insurance Act (HR 5904/S. 2803). This legislation reduces the budget of the Health and Human Services Department by the amount diverted to fund the Transitional Reinsurance Program and thus bailout the insurance companies. The insurance industry — which worked behind the scenes to pass Obamacare — is already up in arms over efforts to deny them a bailout. Campaign for Liberty members who oppose taxpayer funds to bailout insurance companies should call their Representatives and Senators and tell them to ensure that the end-of-year spending bill contains language ensuring taxpayers are not forced to bailout insurance companies through risk corridor or transitional reinsurance . For more information on this issue, refer to this coalition letter to Congress, signed by over 50 groups and individuals including the Campaign for Liberty:

October 12, 2016 Dear Members of Congress: Several years into its implementation, problems with the so-called Aff ordable Care Act (ACA) continue to mount. Families and businesses across the country face skyrocketing healthcare premiums and deductibles; they also face fewer insurance options as co-ops fail and insurance companies leave the health care exchanges. On top of the billions in subsidies and the mandate that Americans buy insurance, the President’s health care law created several transitional programs intended to stabilize insurance markets and reduce insurance company risk during implementation, including the Transitional Reinsurance Program and the Risk Corridor Program.

Insurance companies and the Obama administration are currently seeking to extend these programs and expand their scope. The Transitional Reinsurance Program requires depositing $5 billion into the U.S. Treasury to off set the costs of Obamacare. Yet the Obama administration has failed to deposit a single dollar into the Treasury to date—instead, it has redirected these funds toward insurance companies experiencing greater-than-expected losses. The Risk Corridor Program allows insurance companies to underwrite risky policies that they wouldn’t otherwise cover, putting taxpayers on the hook if the costs of a plan run higher than expected.

This program has been overwhelmed by the magnitude of insurance company financial losses, leaving the budget-neutral program unable to provide all of the requested bailout money. Although current law prohibits the use of fiscal year 2016 appropriated funds to supplement the Risk Corridor Program, the Obama administration announced that it will seek to end the prohibition and open the risk corridor bailout spigot. In classic fashion, the Obama administration has indicated intentions to work around Congress to get what it wants.

In a Sept. 9 memorandum, the Center for Medicare and Medicaid Services said it is open to resolving baseless lawsuits f led by insurance companies seeking additional payments under the Risk Corridor Program. Through settlements, the administration could bypass Congress altogether and continue to misuse taxpayer dollars to pay for bailouts. Thankfully, there are actions that Congress can take to stop this.

The first is to recover the $5 billion illegally given to insurance companies through the reinsurance program by passing the Taxpayers Before Insurers Act (S. 2803, HR 5904), sponsored by Senator Sasse and Congressman Walker. The second is to prevent this from happening again — Congress should continue the budget neutrality provision in the Risk Corridor program, as well as pass legislation preventing the administration from using the “Judgment Fund” or any other taxpayer dollars to give money to insurers.

American households deserve better than to have their tax dollars go toward bailouts for insurance companies. Thank you for your attention to this important issue. Sincerely, Mark Holden, Chairman, Freedom Partners Chamber of Commerce Jim Martin, Chairman, 60 Plus Association Don Irvine, Chairman, Accuracy in Media Nick Sorrentino, Co-Founder, AgainstCronyCapitalism.org Phil Kerpen, President, American Commitment William H. Shaker, President, American Council for Health Care Reform Sean Noble, President, American Encore Gary L. Bauer, President, American Values Wm. Brent Gardner, VP of Government Aff airs, Americans for Prosperity Grover Norquist, President, Americans for Tax Reform Norm Singleton, President, Campaign for Liberty Albert J. Lechner, Jr. President and CEO, Cause of Action Andrew F. Quinlan, President, Center for Freedom and Prosperity Jeff Mazzella, President, Center For Individual Freedom Jim Backlin, Vice President of Legislative Affairs, Christian Coalition of America David McIntosh, President, Club for Growth Bill Walton, Chairman, Board of Directors, CNP Action, Inc. Michael J. Bowen, CEO, Coalition For a Strong America Tom Brinkman, Jr., Founder, Coalition Opposed to Additional Spending and Taxes Jonathan Bydlak, President, Coalition to Reduce Spending Stephen Moore, Co-Founder, Committee to Unleash Prosperity Chip DeMoss, President and CEO, Compact for America Gregory Conko, Executive Vice President, Competitive Enterprise Institute Dan Caldwell, Vice President, Concerned Veterans for America Penny Nance, President, Concerned Women for America Neil Bradley, Chief Strategy Offi cer, Conservative Reform Network Robert K. Fischer, Meeting Coordinator, Conservatives of Faith Thomas Schatz, President, Council for Citizens for Against Government Waste David Bozell, President, For America Tarren Bragdon, President and CEO, Foundation for Government Accountability William Hillman, Chairman, Free Market America Matt Kibbe, President, Free the People Adam Brandon, President and CEO, Freedom Works Andrew Clark, President, Generation Opportunity Michael Needham, Chief Executive Officer, Heritage Action Dan Perrin, President, HSA Coalition Heather Higgins, President and CEO, Independent Women’s Voice Seton Motley, President, Less Government Daniel Garza, President, Libre Initiative Gregory Angelo, President, Log Cabin Republicans Harry C. Alford, President and CEO, National Black Chamber of Commerce Willes K. Lee, President, National Federation of Republican Assemblies Brandon Arnold, Executive Vice President, National Taxpayers Union Eli Lehrer, President, R Street William Whipple, III, President, Secure America’s Future Economy Teri Christoph, Co-Founder, Smart Girl Politics David Williams, President, Taxpayers Protection Alliance Judson Phillips, Founder, Tea Party Nation Jenny Beth Martin, Co-Founder, Tea Party Patriots C. Preston Noell, III, President, Tradition, Family, Property, Inc. Beverly Gossage, President, HSA Benefits Consulting Doug Badger, Health Policy Analyst and Former Presidential Advisor