Yesterday, the New York Times detailed the highly irregular manner preceding the administration’s decision to make the CSR payments once Congress refused to grant the White House’s request for an appropriation. Despite strong disagreements over the legality of these payments among IRS employees, top political appointees with the administration, including then-Attorney General Eric Holder and Treasury Secretary Jack Lew, signed off.
At a congressional deposition, David Fisher, an IRS financial risk officer at the time, testified that the process behind the authorization of the CSR payments was unusual. Moreover, he testified that the “cost-sharing reduction payments are not linked to the Internal Revenue Code, as far as I could tell, directly anywhere. There is no linkage to the permanent appropriation, nor is there any link to any other appropriation that was indicating what account these funds should be paid from.”
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House Republicans say that the Obama administration is ignoring subpoenas for documents related to ObamaCare spending they call illegal.
“Your refusal to provide the requested documents and information raises serious concerns about the Department’s willingness to be accountable for the lawful execution of laws passed by Congress,” Upton and Brady write to HHS Secretary Sylvia Mathews Burwell.
A federal district judge ruled this month, in a lawsuit brought by House Republicans, that the Obama administration lacks the authority to pay cost-sharing subsidies to health insurers if Congress has not appropriated the funds. Some civil servants in the administration may agree.
The House Ways and Means Committee released a deposition Tuesday of David Fisher, former chief risk officer for the Internal Revenue Service. In it, Mr. Fisher recounts a series of events in late 2013 and early 2014 regarding the source and legality of Obamacare cost-sharing subsidies to insurers.
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Two recently filed lawsuits illustrate continuing difficulties the administration faces in implementing the Affordable Care Act, particularly under the constraints imposed upon it recently by Congress. Specifically, the suits illustrate the legal difficulties for the administration created by Congress’ limiting of “risk corridor” payments—made to insurers with high claims costs—to amounts contributed to the risk corridor program by insurers with low costs. Last year, CMS announced that it would have only $362 million in contributions to pay out $2.87 billion in requested payments, and so would only pay out 12.6 cents on the dollar for payment claims.
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On Jan. 13, 2014, a team of Internal Revenue Service financial managers piled into government vans and headed to the Old Executive Office Building for what would turn out to be a very unusual meeting.
The clandestine nature of the session underscores the intense conflict over Obamacare spending, which is the subject of a federal lawsuit in which House Republicans have so far prevailed, as well as a continuing investigation by the Ways and Means and the Energy and Commerce Committees. It also shows that more than six years after President Obama signed the Affordable Care Act into law, Republican opposition has not waned.
After failing to win congressional approval for the funds, the Obama administration spent the money anyway and has now distributed about $7 billion to insurance companies to offset out-of-pocket costs for eligible consumers. The administration asserts that the health care legislation provided permanent, continuing authority to do so, and that no further appropriation was necessary.
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Rushing to enact the giant Obamacare bill in March 2010, Congress voted itself out of its own employer-sponsored health insurance coverage—the Federal Employees Health Benefits Program. Section 1312(d)(3)(D) required members of Congress and staff to enroll in the new health insurance exchange system. But in pulling out of the Federal Employees Health Benefits Program, they also cut themselves off from their employer-based insurance contributions.
Obamacare’s insurance subsidies for ordinary Americans are generous, but capped by income. No one with an annual income over $47,080 gets a subsidy. That’s well below typical Capitol Hill salaries. Members of Congress make $174,000 annually, and many on their staff have impressive, upper-middle-class paychecks.
Maybe the lawmakers didn’t understand what they were doing, but The New York Times’ perspicacious Robert Pear certainly did. On April 12, 2010, Pear wryly wrote, “If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?”
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The Committee for a Responsible Federal Budget (CRFB) says the proposals of Democratic presidential candidate Bernie Sanders would add $19 trillion to the debt — an increase from its previous estimate.
In an analysis published in April, the CRFB estimated that the Independent senator’s proposals would add $2 trillion to $15 trillion to the debt, depending on the cost of Sanders’s single-payer healthcare plan. Since then, two new independent analyses have found that the healthcare plan “would cost dramatically more than the campaign-provided estimates suggest,” the CRFB said Thursday in its updated analysis.
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A plan the Clinton campaign unveiled in September would create a refundable tax credit worth as much as $2,500 per individual and $5,000 per family to cover out-of-pocket health-care expenses. Knowing there is a federal credit might give employees incentive to incur additional expenses to exceed the subsidy threshold. That would mean a credit aimed at mitigating the effects of rising health costs for some families could end up exacerbating the problem on a broader scale.
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Another bombshell could soon drop on the Affordable Care Act insurance exchange market, and it might come at a highly vulnerable moment for ObamaCare.
Rosemary Collyer, U.S. District Judge for the District of Columbia, is expected to soon issue her ruling in U.S. House of Representatives v. Burwell, a case in which House Republicans claim the Obama administration is illegally funding the ACA’s cost-sharing subsidies without a congressional appropriation.
If, as some legal observers believe is possible or even likely, the George W. Bush-nominated Collyer decides against the administration, it would further rattle insurers who are facing multiple difficulties in the exchange business. UnitedHealth Group announced last week that it was pulling out of most exchanges because of its financial losses. Such a ruling would be a shock, even though it surely would be appealed, and the case could ultimately reach the Supreme Court.
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Here’s some bad news for the insurance industry: Unexpectedly generous corporate subsidies didn’t save companies selling ObamaCare policies from bleeding red ink. The worse news: Those subsidies are set to expire in 2017, meaning that insurers will have to make ends meet without billions in handouts.
Those are among the matters discussed in a study by the Mercatus Center, authored by Brian Blase, Edmund Haislmaier, and Doug Badger. Thestudy, based on detailed data derived from insurer regulatory filings for the 2014 benefit year, finds that companies that sold ObamaCare plans in the individual market lost more than $2.2 billion, despite receiving $6.7 billion (an average of $833 per enrollee) in “reinsurance” subsidies. Those reinsurance payments were 40 percent more generous on a per-enrollee basis than insurers had expected when they set their 2014 premiums.
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