Republicans spar with HHS over insurer ‘bailout’

Congressional Republicans are clashing with the Obama administration over whether it has the authority to distribute money to health insurance companies in what they are calling a “taxpayer bailout” under ObamaCare.

Health and Human Services Secretary Sylvia Mathews Burwell sent a letter this week to Rep. Fred Upton (R-Mich) and Sen. Jeff Sessions (R-Ala.) asserting that she has the legal authority to redistribute the money in the “risk corridors” program, which was created by the healthcare law.

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The “risk corridors” program, which was modeled after a provision in the Medicare prescription drug benefit passed in 2003, is meant to ease the transition for insurers into ObamaCare. It would achieve that by redistributing money from insurers with healthier, less expensive consumers to those with sicker, more costly enrollees.

“The temporary risk corridor provision ... is an important safety valve for consumers and insurers as millions of Americans transition to a new coverage in a brand new marketplace,” Burwell wrote.

Republicans have denounced the program as an effort by the government to bail out insurers. Last week, Upton and Sessions wrote to Burwell stating that the program is unlawful because there is no statute giving her the legal authority to hand out the funds.

The lawmakers cited Congressional Research Service and Government Accountability Office (GAO) opinions that determined the department is authorized to manage the insurance risk corridor program, but not to make payouts.

Burwell responded Wednesday by referring the Republican lawmakers to an earlier HHS letter to the GAO where the agency argues the funds can be collected and redistributed under the department’s authority to manage “user fees.”

User fees are charges various government agencies require of industries to pay for services such as those made by drugmakers to expedite their drug application process by the Food and Drug Administration.

Upton and Sessions rejected that argument.

“HHS now says that its entire legal authority to make risk corridor payments is predicated on the funds being treated as ‘user fees,’ ” Sessions said. “But as recently as last year, the president’s budget deposited risk corridor payments into the Treasury general fund — conclusive proof that they are not user fees.”

Upton said the program was another example of the administration making decisions without congressional authority.