Republican probes $111 billion jump in cost of healthcare law

A powerful House Republican wants the Obama administration to explain why it’s asking for an extra $111 billion to implement part of the healthcare reform law.

Ways and Means Committee Chairman Dave Camp (R-Mich.) is asking about a spike in the estimated costs of subsidies to help people buy private insurance — a central, and expensive, component of the new healthcare law.

The administration’s budget request this year included $111 billion more for subsidies than its request last year. The difference falls across the same seven-year window. 

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“This staggering increase in health insurance exchange subsidy spending cannot be explained by legislative changes or new economic assumptions, and therefore must reflect substantial changes in underlying assumptions regarding the program’s utilization and cost,” Camp wrote Friday in a letter to Treasury Secretary Timothy Geithner.

Democrats dismissed the inquiry and said the increase in subsidies for private coverage was more than offset by reductions in Medicaid spending.

“Republicans know full well that this is the result of revised technical estimates and changes in the law that reduce costs for Medicaid, but they will say anything in their quest to put insurance companies back in charge," said Nadeam Elshami, communications director for House Minority Leader Nancy Pelosi (D-Calif.).

Congress voted this year to fix a "glitch" in the healthcare law that made many middle-income people eligible for Medicaid. Those people will now be eligible for exchange subsidies.

The Treasury Department said the increase is technical and does not reflect any change in how the administration plans to implement the healthcare law.

"The Affordable Care Act will reduce the deficit and lower health care costs for millions of Americans," Treasury spokeswoman Sabrina Siddiqui said. "Changes in the law made by Congress account for roughly two-thirds of the adjustment and the remainder come from revised technical assumptions. The estimates do not assume changes in what Exchanges look like, the cost of insurance or the number of Americans who will get their insurance in this new marketplace.”

The healthcare law establishes new marketplaces for private insurance, called exchanges, in each state. The exchanges are open to individuals and small businesses, who usually pay much more for insurance than people who get their coverage through a large employer. Most people who buy coverage through an exchange will get subsidies to help cover the cost.

Camp’s letter cites Congressional Budget Office scores of two bills that passed since the White House submitted its last budget. Together, the bills were expected to cut the cost of exchange subsidies by about $9 billion, he said, making the White House’s projected increase all the more surprising.

Health and Human Services Secretary Kathleen Sebelius said during a Ways and Means hearing earlier this week that she was unfamiliar with the issue.

— This post was last updated at 7:23 p.m.