GOP says program for retirees shows healthcare law is flawed

The healthcare law’s program for early retirees is an example of the law’s broader flaws, House Republicans charged Wednesday.

Republicans on the Energy and Commerce Committee criticized the way the Obama administration handled the Early Retiree Reinsurance Program (EERP). The Health and Human Services Department announced last week that nearly all of the EERP’s $5 billion budget had been spent and the program would shut down at the end of the year.

The healthcare law authorized the EERP through 2014, though it also said HHS could stop accepting applications at any time if funds began to run short.

“If the Administration exhausted an entire $5 billion budget approximately three times faster than estimated, what does that portend for the accuracy of the cost estimates cited in support of the other expensive aspects of the trillion dollar health care reform law?” Energy and Commerce staff asked in a memo Wednesday.

HHS says the speed with which the EERP exhausted its funding just shows that the program was popular. Employers jumped at the chance to lower the cost of providing health benefits to their retirees, HHS says, and some 5 million people received benefits from the program.

Republicans disagree with that analysis.

“Like (the healthcare law) itself, the ERRP simply threw money at a problem—here, the cost of retiree medical care—without doing anything to address the skyrocketing costs of that care,” the GOP memo states. “The program had no rational basis or justification, and simply bailed out overextended state programs, wasted taxpayer money that otherwise could never have been justified or spent on a case-by-case basis, and unnecessarily doled out taxpayer funds to some of the nation’s most profitable corporations.”

HHS has hired an outside auditor to examine the program and verify that its payments were legitimate. And a recent Government Accountability Office report found nothing untoward about the way the money was distributed.

— This post was updated at 5:10 p.m.