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