Last
month, buried in a 435-page regulatory filing from the Centers for
Medicaid and Medicaid Services (CMS), the Obama administration
attempted to
reassure the health insurance industry that, if necessary,
federal officials would find money to make payments for Obamacare’s
“risk corridors”—the temporary shared-risk financing system built
into the health law that has been dubbed a bailout of the health
insurance industry.
The regulatory filing reiterated the administration’s position
that the program would likely be revenue neutral. But in the event
that it’s not, it seemed designed to suggest that insurers
shouldn’t worry.
“In the unlikely event of a shortfall for the 2015 program
year,” the regulation said, “HHS [Health and Human Services]
recognizes that the Affordable Care Act requires the Secretary to
make full payments to issuers. In that event, HHS will use other
sources of funding for the risk corridors payments, subject to the
availability of appropriations.”
On the surface, that seems pretty clear: If the risk corridors
program, a
symmetrical arrangement which requires the administration to
cover half of insurer losses if claims expenses go beyond 103
percent of expected costs and insurers to pay in if costs come in
at 97 percent of expectations, ends up costing the administration
money, it will find a way to pay.
The complication comes from the final phrase: “subject to the
availability of appropriations.”
That could be a problem. Because according to a January
memo from the Congressional Research Service (CRS), there do
not appear to be appropriations available to make the payments.
Although the health law does direct the Secretary of Health and
Human Services to make risk corridor payments, the CRS memo
explains that the legislation “does not specify a source from which
those payments are to be made.”
That’s a problem. According to the Government Accountability
Office (GAO), it’s not enough for a statute merely to direct
payment. It also must designate which funds are to be used. Both
elements must be present in order for a payment to be lawful.
So where will the money come from? How will the administration
shift the money around if they don’t have the authority to tap any
particular funds? That’s what Rep. Fred Upton (R-Mich.) of the
House Energy and Commerce Committee and Sen. Jeff Sessions (R-Ala.)
of the Senate Budget Committee want to know.
The two GOP legislators have written a
letter to newly installed HHS Secretary Sylvia Mathews Burwell
asking for an explanation of just how the administration believes
it can justify the creative financing it has promised, should such
spending become necessary.
Does Burwell agree with the legal analysis offered by CRS and
GAO? Does HHS have a legal analysis of its own? Given the legal
analysis stacked against the administration, these seem like basic,
reasonable questions that should be answered and explained.
In confirmation hearings before being confirmed as HHS
Secretary, Burwell suggested that she would be more open,
transparent, and responsive
to Congress than her predecessor, Kathleen Sebelius, with regards
to the health law. That’s a low bar. How Burwell responds will tell
us something about whether she’s clearing it, and if so, by how
much.
Read the complete Upton/Sessions letter below.
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