No Obamacare Bailouts for Insurers Without Congressional Approval, Says GAO

By forcing Americans to buy
their products, President Obama’s signature Affordable Care Act is
widely seen as a
winning proposition for health insurance companies. Conscripted
customers! What more could a well-connected business want? But the
law’s complex rules require insurers to cover the costs imposed by
older and ailing customers with the payments from young and healthy
customers. Potentially, a company could end up with a
disproportionate ratio of sick customers drawn by the promise of
subsidized coverage—drowning the seemingly winning proposition in
red ink. If that happens, says the
Government Accountability Office (GAO), the administration
can’t bail out insurers without permission from Congress.

The GAO decision comes in response to a congressional inquiry
about the administration’s “risk corridors” (officially, the

premium stabilization programs) scheme, which would subsidize
unprofitable plans by transferring money to them from those
actually in the black under Obamacare. The risk corridors plan is a
temporary measure intended to entice insurers to offer Obamacare
coverage while the program gets on its feet. The assumption is that
after 2016 plans will balance out costs and benefits because of
those conscripted customers.

But it’s not enough for a statute to require that an agency make
a payment—the funds have to be legally available. As the GAO
decision puts it, “At issue here is whether appropriations are
available to the Secretary of HHS to make the payments specified”
under the law. The GAO says they’re not.

The problem for the administration is that collecting money and
disbursing it through government agencies requires budgetary
authorization. That authorization can only come from Congress, and
must be authorized in each annual budget, year after year.

Language appropriating funds for “other responsibilities of the
Centers for Medicare and Medicaid Services” would need to be
included in the CMS PM appropriation for FY 2015 in order for it to
be available for payments to qualified health plans under
section 1342(b)(1). Similarly, language appropriating “such
sums as may be collected from authorized user fees” would need to
be included in the CMS PM appropriation for FY 2015 in order for
any amounts CMS collects in FY 2015 pursuant to
section 1342(b)(2) to be available to CMS for making the
payments pursuant to section 1342(b)(1)

So, if Congress doesn’t go along with the idea of gathering
money from profitable health exchange insurers and handing it to
unprofitable ones, the risk corridors idea is a non-starter.

Of course, Congress may authorize the payments because it
doesn’t have the backbone for another fight. That wouldn’t be a
shock. Or, the administration could ignore the GAO and use
executive authority to make yet another unilateral change to the
president’s health plan. That also wouldn’t be a shock.

But, if nothing else, the GAO decision is further evidence of
the slapdash crafting of the Affordable Care Act, even when it
comes to the legislative duct tape intended to hold it
together.