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Heritage Action Supports Sasse-Walker Taxpayers Before Insurers Act (S. 2803 / H.R. 5904)

Last modified on 2016-07-26 15:40:33 GMT. 1 comment. Top.

When setting up the Obamacare exchanges, three “risk mitigation” (read: bailout) provisions were written into the law to incentivize large health insurance companies to participate in the government takeover of our healthcare industry. The three bailouts are known as the risk corridors, reinsurance, and cost-sharing subsidies. Despite these cronyist “risk mitigations” for big business, Obamacare has been an unmitigated disaster for the average citizen’s health plans and tax dollars. In fact, due to these bailout options, some of the worst fiscal consequences for the taxpayers are potentially yet to come.

As The Heritage Foundation explained last year, the reinsurance program funneled nearly $8 billion to Obamacare insurers in 2014, paid for “by a tax on everyone with non-Obamacare coverage.” Highlighting the problems with the reinsurance bailout provision, Chris Jacobs at National Review writes:

“The second Obamacare temporary stabilization program, called reinsurance, requires ‘assessments’ — some would call them taxes — on all employer-provided health-insurance plans. These assessments are designed to 1) reimburse the Treasury for the $5 billion cost of a separate reinsurance program that operated from 2010 through 2013 and 2) reimburse insurers with high-cost patients from 2014 through 2016.

“…In 2014, insurers received nearly $8 billion in payments from the reinsurance ‘slush fund.’ The administration still holds nearly $1.7 billion in funds from the 2014 benefit year — money that will no doubt get shoveled insurers’ way as well. While the law explicitly stated that the Treasury should get reimbursed for its $5 billion before insurers receive payments from the reinsurance fund, the Obama administration has implemented the law in the exact opposite manner — prioritizing insurer bailouts over repaying the Treasury. The Congressional Research Service (CRS) has stated that this action represents a clear violation of the text of the Obamacare statute.”

In summary, HHS has decided to use billions in taxpayer dollars to reimburse health insurance companies as a reward for participating in Obamacare, instead of depositing the money back to the Treasury, even though this is a clear violation of the law.  

To stop these illegal payments, Sen. Ben Sasse (R-NE) 97% and Rep. Mark Walker (R-NC) 86% have introduced the Taxpayers Before Insurers Act (S. 2803 / H.R. 5904).  According to Senator Sasse’s website, the bill would:

“penalize the Department of Health and Human Services (HHS) for illegally prioritizing big insurance companies ahead of taxpayers through the Affordable Care Act’s reinsurance program.

“…This legislation would slash 50 percent of HHS’ general departmental management fund unless the Secretary of HHS pays the full amount taxpayers are owed.”

Additionally, upon introduction of the bill, Rep. Walker wrote an op-ed explaining:

“My bill is simple: I want HHS to follow the law it helped write. It would require HHS to pay the $3.5 billion it has taken from taxpayers back to the Treasury or face a 50 percent cut in its operating budget.

This should not be a partisan idea: the government should follow the law and prioritize the people it serves over big insurance companies. Obamacare is failing on all fronts. It’s not working for patients. It’s not working for doctors. And it’s not working for insurance companies either. But that does not mean taxpayers should be cheated through a corporate welfare system that rewards the well­-connected. The Taxpayers Before Insurers Act would protect Americans from being forced to pay even more for Obamacare’s failures and enforce the rule of law.”

While full repeal of Obamacare must continue to be the goal of Congress, Congress must also take action to hold HHS accountable to the clear language of the law itself and ensure that taxpayers aren’t cheated out of billions in illegal payments to well-connected insurance companies.   Action must be taken to stop the reinsurance bailout, as well as the risk corridor bailout and cost-sharing subsidies.  Though these bailout provisions are set to expire at the end of this year, there is real concern that the Obama Administration may unilaterally extend these costly Obamacare subsidies to continue propping up the failed program – or that Congress would proactively extend them in a year-end deal. Therefore it is critical that Congressional leadership not only stop the illegal reinsurance and risk corridor payments, but also use any final appropriations bill or continuing resolution to end all three of these bailouts, or any other Obamacare bailouts, once and for all.

***Heritage Action supports this legislation, encourages Representatives and Senators to support it, and reserves the right to key vote in the future.***