An Illegal Bailout for ObamaCare The White House plots a Treasury raid without an appropriation.
http://www.wsj.com/articles/an-illegal-bailout-for-obamacare-1475276262
We keep reading that Donald Trump poses a unique threat to constitutional norms if he’s elected. His liberal critics would have more credibility if they called out the Obama Administration for its current (not potential) abuses of power, and here’s an opportunity: The Administration is crafting an illegal bailout to prop up the President’s health-care law.
News leaked this week that the Obama Administration is moving to pay health insurers billions of dollars through an obscure Treasury Department account known as the Judgment Fund. This would be a cash infusion for an ObamaCare program known as “risk corridors,” an allegedly temporary provision in the 2010 law that enticed insurers to participate in the exchanges.
The program was supposed to hedge against the risk that insurers would suffer large losses from plans that are limited in how they can price premiums for age or illness. Profitable insurers would pay into a fund that would be redistributed to companies that took unforeseen losses. The Administration said that risk corridors would be budget-neutral because more insurers would benefit than buckle, and the fund might even produce a profit.
Meanwhile back on earth, risk corridors resulted in industry-wide adverse selection, in which there are not enough healthy insurers to subsidize the sick ones. In 2014 the Centers for Medicare and Medicaid Services (CMS) collected a mere 12% of what insurers requested, and the fund payed out some $360 million of nearly $2.9 billion in claims.
The agency tried to raid other Health and Human Services funds to make up the shortfall, but legislators blocked that run around the law. Congress has twice stipulated that the Affordable Care Act must be enforced as written: No taxpayer money may be appropriated to risk-corridor payments. Yet CMS said in a memo this year that the payments are “an obligation of the United States government,” and the agency is “open to discussing the resolution of those claims.”
The plan now is to sneak around Congress through publicly financed lawsuit settlements. The Justice Department is eager to end a $5 billion class-action suit from Oregon’s now insolvent co-op, Health Republic Insurance, which demanded full payment of risk-corridor claims. So Justice will likely unload cash from the Treasury Department’s Judgment Fund, a 1950s invention that permanently allows for payment of judgments against the U.S.
This is an illegal move to spend money where Congress wouldn’t. A June memo from the Congressional Research Service notes that plaintiffs would have to wait until the government digs up more money or Congress decides to appropriate it. In a 1998 letter the Government Accountability Office pointed out that the Judgment Fund is not a tool to “circumvent congressional restrictions on appropriations,” which is precisely what the White House is doing.
The Administration will do anything to rescue its flailing Affordable Care Act, and nothing so meager as the law will interfere. This damage to the separation of powers, not a health-care bill, will be President Obama’s abiding legacy.
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