Category: Investigations

The Trump administration and the House of Representatives are asking for a hold on a case over Affordable Care Act payments that has the potential to test the boundaries between the branches of government.

At issue is not just whether the executive branch had unconstitutionally funded certain ACA payments to insurers, but the limits on government power when it comes to appropriations.

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On January 3, 2017, Judge Margaret Sweeney of the United States Court of Claims certified Health Republic Insurance Company v. United States as a class action. This is one of more than a dozen cases that have been brought by insurers in the Court of Claims challenging the failure of the government to pay marketplace insurers amounts that they claim were due to them under the ACA’s risk corridor program. The class includes:

All persons or entities offering Qualified Health Plans under the Patient Protection and Affordable Care Act in the 2014 and 2015 benefit years, and whose allowable costs in either the 2014 or 2015 benefit years, as calculated by the Centers for Medicare and Medicaid Services, were more than 103 percent of their target.

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On December 28, 2016, two shots were filed in quick succession in the battle over the cost-sharing reduction (CSR) payments, followed on January 29 by an order from the court. The House of Representatives has challenged the CSR payments (which reimburse insurers for reducing cost sharing for low-income marketplace enrollees) in House v. Burwell, claiming that the payments are illegal because they were never appropriated. The lower court ruled for the House, but the Obama administration appealed, arguing that money had been appropriated and that the payments were legal. With the election of Donald Trump, the House asked for a stay of the litigation, suggesting to the court that it might be able to settle the case with the Trump administration. The court stayed the appeal until late February.

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The Urban Institute released a new analysis yesterday of the impact of a bill that Congress passed last year to repeal large parts of the Affordable Care Act (ACA). Urban’s analysis is based on many uncertain assumptions, including the implausible one that the incoming Trump administration and Congress, despite numerous campaign promises, will not provide any flexibility for people to purchase non-ACA-compliant products after repeal. Urban’s projections should be treated with significant skepticism because of the large uncertainty about its assumptions as well as substantial mistakes Urban has made in the past about the impact of the ACA.

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A federal judge denied the Obama administration’s request to pause a risk-corridor case brought by Portland, Ore.-based insurer Moda Health until courts rule on similar lawsuits.

Moda Health sued the government in June for $191 million in payments owed under the Affordable Care Act’s risk-corridor program for 2014 and 2015. The CMS has paid just $11.3 million so far, and recent data from the CMS further shows that Moda is set to receive only $2.9 million on top of that from the funds collected under the program for 2015.

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New York may have misallocated roughly $150 million in Obamacare grants, the Department of Health and Human Services Office of the Inspector General said Tuesday. The watchdog office says the state should refund any misspent money to the federal government.

HHS OIG found the state did not have internal procedures necessary to ensure federal funding was allocated properly to set up the state’s Affordable Care Act insurance exchange.

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A new study by Jonathan Gruber, one of the ACA’s chief architects, suggests that roughly two-thirds of new Medicaid enrollees in 2014 were eligible for the program under previous state eligibility criteria—meaning that they were not made eligible by the ACA. Gruber’s results, combined with much higher than expected Medicaid enrollment and spending over the past three years, has profound implications for the distribution of program costs and the effect of a repeal of the ACA. This means that the federal government has likely paid billions more each year than the law allows for the expansion population while states have spent billions less. Additionally, Gruber’s results suggest that if the ACA were repealed, a lot fewer people would likely lose coverage than previously thought.

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The House of Representatives has asked the Federal Court of Appeals for the D.C. Circuit to temporarily pause the House lawsuit challenging an ACA subsidy program, a move that could allow the incoming Trump administration to swiftly unwind the ACA exchanges. The House argues that the ACA did not fund payments to health insurance companies to help low-income people pay for their out-of-pocket health care costs, which the Obama administration has been paying anyway. If the court approves the request, it would allow Trump’s new administration time to decide whether it wants to keep defending a pivotal part of the health care law as it plots out a strategy to repeal the ACA. If Trump’s Justice Department doesn’t continue to defend the ACA, the subsidies could be eliminated immediately (unless Congress makes a deliberate decision to legally fund them).

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The Department of Health and Human Services finally released the 2015 Affordable Care Act risk corridor data. The data show the rapid deterioration of the ACA exchanges from 2014 to 2015.

The ACA’s risk corridor program was intended to transfer funds from profitable insurers to unprofitable ones for the first three years of the exchanges (2014 to 2016). The program ran a $2.5 billion deficit for the 2014 plan year as far more insurers incurred losses than made profits. In 2015, the deficit increased to more than $5.8 billion—a 132% increase.

If taxpayers are forced to bail out insurers for these losses, the total tab for 2014 and 2015 now exceeds $8.3 billion. If insurers’ experience in 2016 tracks what happened in 2015, the total 3-year risk corridor deficit will exceed $14 billion. The Obama administration has given mixed signals about whether it will tap taxpayer funds to bail out insurers for these losses. We now know just how much money is at stake.

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President-elect Donald Trump says he wants to preserve health insurance coverage even as he pursues repeal of the Obama-era overhaul that provided it to millions of uninsured people.

How his administration handles a pending lawsuit over billions of dollars in insurance subsidies will reveal whether Trump wants an orderly transition to a Republican-designed system or if he’d push “Obamacare” over a cliff. Stripping away the subsidies at issue in the case would put the program into a free-fall.

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