Heritage Action Calls on Congress to Prevent Insurance Company Bailouts

Washington — Today, Heritage Action and dozens of other conservative leaders sent the following letter to House and Senate Republican Leadership calling on them to prevent an insurance company bailout under Obamacare.

To the House and Senate Republican Leadership:

We the undersigned organizations urge you to clarify language in the upcoming appropriations bill to prevent federal dollars from going to bail out insurance companies participating in Obamacare.  This request is based on new information regarding the risk corridor program created by the Patient Protection and Affordable Care Act (PPACA, also known as “Obamacare”).

As you know, Obamacare creates government-run exchanges throughout the country through which individuals can purchase health insurance. As part of their effort to encourage insurance companies to participate in the exchanges, Obamacare included a “risk corridor” program (Section 1342 of PPACA). The risk corridor program is intended to collect money from insurers that do especially well in the exchanges and remit that money to insurers that experience losses in the exchanges.

However, unlike similar programs in the past, Congress did not mandate that the new Obamacare risk corridor program be deficit neutral. In other words, it allows for unlimited taxpayer dollars to go to underperforming insurers in excess of any money received from over-performing insurers. This fact has caused some to be concerned that the Obamacare risk corridor program could result in a significant “taxpayer bailout” for participating insurance companies. Federal subsidies to insurance companies also mask the true premium costs for Obamacare for several years, allowing the law to get further entrenched before the public understands the magnitude of the law’s impact on their premiums and deductibles.  The concerns about bailouts have been exacerbated over the years as the exchanges have experienced various difficulties, and as the Obama Administration has unilaterally changed certain rules relating to Obamacare as a whole.

While these facts have been well known since Obamacare’s passage, new information has come to light recently which we believe should cause you to re-examine language in the upcoming appropriations bill. Specifically, the non-partisan Government Accountability Office (GAO) has confirmed what many have argued, namely that Obamacare did not include funding for risk corridor payments and did not include a mechanism by which the government can automatically transfer revenues from the program to use to pay insurers who experience losses in the exchanges. As such, GAO has said money can only go to insurers through the risk corridor program if Congress proactively appropriates money for that purpose.

While we do not believe it to be Congress’s intent, GAO has interpreted the appropriations language currently in effect in a broad manner which they say allows the government to transfer funds to insurance companies through the risk corridor program. Specifically, GAO believes that generic language included in the appropriations measure currently in effect (P.L. 113-76, as carried forward by P.L. 113-164), which grants a pot of money (not exceeding $3.7 billion) to be spent by the Centers for Medicare and Medicaid Services (CMS) for “other responsibilities,” as well as money “collected from authorized user fees,” can be used for risk corridor payments to insurers.

The GAO report, which was issued on September 30, 2014, constitutes new information that changes the nature of current law to one not intended by its drafters or its supporters when it originally passed. As such, principles of good government would dictate that Congress reevaluate this language during the next consideration of an appropriations measure. We the undersigned organizations urge you to do so in a manner that prevents unlimited taxpayer dollars from going to Obamacare exchange participating insurance companies under the risk corridor program.

Sincerely,

Michael A. Needham, CEO
Heritage Action for America
 
Grover Norquist, President
Americans for Tax Reform
 
Phil Kerpen, President
American Commitment
 
Heather Higgins, President
Independent Women’s Voice
 
Sabrina Schaeffer, Executive Director
Independent Women’s Forum
 
Chris Chocola, President
Club for Growth
 
Brent Gardner, Director of Federal Affairs
Americans for Prosperity
 
Brandon Arnold, Executive Vice President
National Taxpayers Union
 
Matt Kibbe, President and CEO
FreedomWorks
 
Jenny Beth Martin, Co-Founder
Tea Party Patriots
 
Albert Quayle
Victory Solutions
 
Jeffrey Anderson, Executive Director
The 2017 Project
 
Morton Blackwell, Chairman
The Weyrich Lunch
 
Ken Hoagland, Chairman
Restore America’s Voice
 
James L. Martin, Chairman
60 Plus Association
 
Bob Adams, Founder and President
Revive America
 
Colin Hanna, President
Let Freedom Ring
 
Eli Lehrer, President
R Street Institute
 
Thomas Schatz, President
Council for Citizens Against Government Waste
 
Gregory T. Angelo, Executive Director
Log Cabin Republicans
 
George Landrith, President and CEO
Frontiers of Freedom
 
Dan Perrin, President
The HSA Coalition
 
David Wallace
Restore America’s Mission
 
Norm Singleton, Vice President of Policy
Campaign for Liberty
 
Greg Scandlen, Senior Fellow
Health Benefits Group
 
Andrew Langer, President
Institute for Liberty
 
Ron Robinson, President
Young America’s Foundation
 
Naomi Lopez Bauman, Director of Health Policy
Illinois Policy Action
 
Chris Conover, PhD
 
Beverly Gossage, Director
HSA Benefits Consulting
 
Amy Kremer
Blitz the Vote
 
Amy Ridenour, Chairman
National Center for Public Policy Research
 
Judson Phillips, Founder
Tea Party Nation
 
Niger Innis, Executive Director
TheTeaParty.net
 
Elaine Donnelly, President
Center for Military Readiness
 
Hal Sherz, MD, Founder and President
Docs4PatientCare
 
Jim Backlin
Christian Coalition of America
 
Gary L. Bauer, President
American Values
 
Andrew F. Quinlan, President
Center for Freedom and Prosperity