Congressional Republicans fear that President Obama’s team has a new tactic to pay for his plans on foreign policy and domestic policy alike: a “permanent, indefinite” fund managed by the Treasury Department.
Congress banned “Obamacare insurance bailouts” as part of the year-end spending package that passed in 2015, but the White House might be able to find money for those subsidies in the same fund that produced the controversial Iran “ransom” payments in January.
Health insurance companies have taken heavy losses under Obamacare without receiving about $2.5 billion in reimbursements that they expected, and they have filed several lawsuits to recoup the money.
The Department of Health and Human Services wants them to get it. Andy Slavitt, the acting director of the Center for Medicare and Medicaid Services, told lawmakers last week that the federal government has “an obligation” to make the payments.
That has House Republicans worried that the Obama administration plans to get the subsidies to the insurance companies by settling the lawsuits without congressional approval.
“It appears that any such settlements would come from the permanent appropriations for judgments (‘Judgment Fund’),” Energy and Commerce Committee Chairman Fred Upton, R-Mich., Rep. Morgan Griffith, R-Va., and other members of the committee wrote in a letter to Health and Human Services Secretary Sylvia Burwell.
That’s the same fund that Obama tapped to settle a long-standing dispute with Iran over a canceled weapons sale. But the timing of the Iran deal — the settlement coincided with the release of four American hostages, and the first cash payment was used as leverage to guarantee their release, according to the State Department — led Republicans to accuse Obama of making ransom payments.
The Obama administration could get the money without asking Congress because of the existence of the Judgment Fund, a “permanent, indefinite appropriation” managed by the Treasury Department.
“The Judgment Fund is also available to pay amounts owed under compromise agreements negotiated by the U.S. Department of Justice in settlement of claims arising under actual or imminent litigation, if a judgment on the merits would be payable from the Judgment Fund,” the Treasury Department explains.
That raises the possibility that HHS plans to use the fund to settle lawsuits filed by the insurance companies. “The administration’s explicit offer to settle these lawsuits appears to be a direct circumvention of the clear congressional intent to prohibit the expenditure of federal dollars on this program,” Upton and the other Republicans wrote.
Last week, Florida Republican Rep. Ron DeSantis asked an administration official during a hearing of the House Oversight and Government Reform Committee if the administration was trying to “invite lawsuits and provide the risk corridor payments through the judicial process.”
“This is an obligation of the federal government,” responded Mandy Cohen, chief operating officer of the Department of Health and Human Services, referring to the risk corridor payments.
Risk corridors are an Obamacare program that pays insurers for big losses and forces insurers with minimal losses to pay into the program. It is intended to mitigate losses for insurers as they navigate a new market created by Obamacare’s exchanges.
Congress required the program to be budget neutral, meaning that it could pay out only what it took in. For the 2014 coverage year, insurers requested nearly $3 billion in payments but received 12 percent of that.
When Slavitt testified before an Energy and Commerce subcommittee last week, he said he didn’t know where the money to reimburse the insurers would come from.
