Covering health insurer losses
through Obamacare’s risk corridors provision—a program frequently
described as a federal bailout of insurers—might not just be
controversial. It may well be illegal.
Indeed, both the
Congressional Research Service (CRS) and the Government
Accountability Office (GAO) have concluded this year, that,
without additional congressional authorization, the administration
has no authority to make payments under the program beyond what is
collected from insurers.
As J.D. Tuccille
noted last week, the GAO’s report was a reminder that “it’s not
enough for a statute to require that an agency make a payment—the
funds have to be legally available.”
Despite the opinions of both CRS and GAO, however, the Obama
administration says it’s going to go ahead with the payments
anyway, congressional authorization or not.
HHS has not made any payments to insurers so far, but it plans
to do so in the fiscal year that starts Oct. 1,” reports
Modern Healthcare. “In response to the GAO
inquiry, HHS indicated that the agency already has the
authority to fund the program under existing
appropriations.”
One defense of the administration’s decision is that Medicare
Part D, the prescription drug program for seniors, also relies on
risk corridors, and the program’s payments are made without
additional congressional authorization. That’s true, but the
payments are made out of Medicare’s Part B trust fund (which, yes,
is itself a sort of accounting fiction, but does at least exist in
some accountant’s sense). There’s no similar fund for making
payments in Obamacare.
At best, it’s another example of the administration implementing
Obamacare in a way that is convenient and yet legally dubious—and
probably illegal.
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