Official hints at settlement talks with ObamaCare insurers

Official hints at settlement talks with ObamaCare insurers
© Greg Nash

A top Obama administration health official indicated Wednesday that there are discussions underway about a possible settlement with insurance companies over ObamaCare payments.

The possibility of settlements has drawn alarm from Republican lawmakers, who warn that the administration is seeking to get around limitations set by Congress.


Several insurers have sued the administration for funds they are owed under an ObamaCare program called risk corridors, which is meant to protect insurers from heavy losses in the early years of the health law. A shortfall in funds has limited payouts.  

Republicans point out that Congress enacted a provision preventing the administration from shifting funds into the program in 2014 but warn that judicial settlements now could be a way around that prohibition, for what they term to be a “bailout” of insurers. 

Rep. Morgan GriffithHoward (Morgan) Morgan GriffithAbortion wars flare up in Congress Overnight Health Care: Big Pharma looks to stem losses after trade deal defeat | House panel to examine federal marijuana policies | House GOP reopens investigation into opioid manufacturers House GOP reopens investigation into opioid manufacturers over role in crisis MORE (R-Va.), at a hearing on Wednesday, asked Andy Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services (CMS), if anyone in his department has had discussions with the Department of Justice about settling the lawsuits with insurers.  

Slavitt indicated the answer is yes.

“I know that our general counsel speaks to Justice regularly, so I assume that they have, but I don’t know any details,” Slavitt said. 

“So there have been discussions, by somebody, with Justice about how you’re going to settle, and you don’t know where the money’s going to come from, but you assume somewhere it’ll come from?” Griffith later asked. 

“Yeah they’re representing us, so we have in fact talked to them, yes,” Slavitt said of discussions with the Department of Justice. 

Republicans have warned that the administration could try to make the settlement payments from a separate “judgment fund” as a way around the congressional restrictions on funding, despite GOP arguments that a Clinton administration legal opinion prevents the judgment fund from being used in that way.  

At a separate hearing on Wednesday, another CMS official, Dr. Mandy Cohen, declined to say if her department believes the judgment fund could be used for these settlements. 

“I’d have to talk to my lawyers on that so I can’t speak to that,” she said. 

At the hearings, Republican lawmakers pointed to a document released by the CMS on Friday that they said seemed to invite settlements.  

“As in any lawsuit, the Department of Justice is vigorously defending those claims on behalf of the United States,” the CMS said of the insurer lawsuits. “However, as in all cases where there is litigation risk, we are open to discussing resolution of those claims. We are willing to begin such discussions at any time.” 

Slavitt said Wednesday that the CMS has had “inquiries” from insurance companies about settlements but added that they have been referred to the Department of Justice.  

Insurers are suing because they only received 12.6 percent of the money they were owed under the risk corridor program for the first year. 

The administration points out that insurers are owed the rest of the money.

“These payments are an obligation of the federal government,” Cohen said. 

The risk corridor program lasts for three years and is meant to stabilize the market and premiums in the early years of the law. 

Democrats have pointed out that Republicans put in similar programs around Medicare’s prescription drug program in 2003 and did not complain about them at the time.