WASHINGTON, DC - The Subcommittee on Oversight and Investigations, chaired by Rep. Tim Murphy (R-PA), today continued its oversight of Obamacare, with a hearing examining its reinsurance program. The program was created to provide financial assistance to insurers offering Obamacare plans, ultimately incentivizing insurers to enroll high-risk individuals. The statute states that a portion of the contributions “shall be deposited into the general fund of the Treasury of the United States and may not be used for the reinsurance program."
Full committee Chairman Fred Upton (R-MI) commented, “Today, the 3.5 billion dollar question is why CMS is now diverting taxpayer dollars to insurance companies without any legal authority to do so."
“On March 11, 2014, CMS issued a rule that spelled out how to divide the fund between Treasury, insurance companies and administrative costs. CMS wrote that Treasury would receive about 25% of the fund in 2015. But while insurers have received billions of dollars from the program, the Treasury has still received nothing," stated Chairman Murphy. “This is because CMS changed its mind ten days later after issuing its final March 11, 2014 rule. Ten days later, CMS published a proposed rule, completely reversing its policy position. In the new rule, CMS prioritized payments to insurers over payments to the Treasury. In short, Treasury gets nothing until insurers are paid in full. CMS finalized this rule in May 2014."
In February, the Congressional Research Service issued a memorandum analyzing CMS’ decision to prioritize reinsurance payments to health insurers. The CRS memorandum concluded that, “Insofar as CMS’ interpretation allows the entire contribution of an issuer to be used only for reinsurance payments, such that no part of it is used for the U.S. Treasury contribution, then that would appear to be in conflict with the plain text of § 1341(b)(4)." The committee shared the memo with Health and Human Services Secretary Burwell at a February hearing on HHS’ budget. Secretary Burwell did not provide any legal justification for its actions.
Despite the clear language of the statute, CMS is continuing to divert funds intended for the U.S. Treasury to insurance companies as reinsurance payments. Over the last two benefit years, CMS has illegally paid out $3.5 billion in reinsurance payments.
Today, when questioned by Chairman Murphy, Acting Administrator Slavitt testified, “we believe we have the statutory authority" to issue the reinsurance payments to insurance companies and not the U.S. Treasury.
“The statute could not be more clear," said Murphy following the hearing. “It is incredibly troubling that the administration continues to ignore our concerns, which have been backed by the non-partisan CRS. This program is essentially one big lifeboat for Obamacare."
Acting Administrator Slavitt also assured Rep. Marsha Blackburn (R-TN) that he would submit to the committee the legal reasoning behind the payments, and not the documents previously sent to the committee, which were publically available and did not explain why CMS changed its legal position.
At the end of the hearing, Acting Administrator Slavitt vowed to respond to the committee’s March 23, 2016, request for documents regarding the program. Chairman Murphy reiterated that the committee is looking for internal documents, not the publicly available documents CMS already sent.
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