Another part of the implementation of President Obama's signature health-care law is being challenged
Another part of the implementation of President Obama's signature health-care law is being challenged | wikipedia, the commons

Watchdog group says HHS may have bilked taxpayers

Did the department that oversees Obamacare bail out insurers with $5 billon meant for the U.S. Treasury?

That question was the subject of a Freedom of Information Act request by the Cause of Action Institute (COA), a public interest lawfirm, to the Department of Health and Human Services (HHS) on Aug. 26.

The funds were collected under a provision of the Affordable Care Act, which established a reinsurance program for high-risk individuals. Insurance providers and third-party administrators of group health plans all paid into it.

By law, these funds were supposed to go to both insurance plans that take on more high-risk individuals and to the Treasury. Yet when the government took in less money than projected, HHS appears to have taken about $5 billion earmarked for the Treasury and given it to insurance companies instead.  

Critics charge that this is a government bailout of the insurance industry at a time when Obamacare is looking wobbly, as one major insurer has already signaled it intends to exit the program. They also point out that such boundary shifting is not unheard of in HHS’s handling of the president’s signature legislative achievement.

“There is no area that the Obama administration has ignored the rule of law more than Obamacare,” David Hogberg, healthcare expert and author of the book “Medicare’s Victims,” said Monday.

“President Obama did not have the authority to let people who lost their insurance plans get them back, nor did he have the authority to temporarily suspend and then to modify the employer mandate. Yet he did so because he knew he could get away with it. Who was going to complain?”

Republicans didn’t agree with the law, but didn’t want that burden to fall on taxpayers and companies. Democrats feared that without some fudging, the law might not work at all. So the parties gave HHS plenty of wiggle room to modify and reinterpret the law.

Hogberg thinks that pass may have affected how HHS spent the reinsurance funds.

“Now the Obama administration feels emboldened to short the taxpayers their due under Obamacare by diverting $5 billion in the reinsurance program from the Treasury to insurance companies participating in the Obamacare Exchanges. Who is going to complain? The insurers won't,” he said.


Yet this time, somebody complained.


“COA Institute seeks to understand why the Obama administration bailed out insurance companies with money that should have been returned to the U.S. Treasury to benefit taxpayers,” Alfred Lechner, Jr., former federal judge and head of the lawfirm said in a statement to AMI Newswire Monday.


“American taxpayers have a right to know why the Obama administration skirted the law and gave money intended for the U.S. Treasury to insurance companies.”


COA’s request for more information will likely only be part of a larger campaign to bring the government to heel on Obamacare spending, especially as Obama readies to depart the presidency. Lawsuits and legislation are possible next steps.


Hogberg argues HHS’s alleged creative accounting may come to look like shuffling deck chairs on the Titanic soon enough.


“This is really just a pitiful attempt by the Obama Administration to stop the Obamacare Exchanges in their slow but sure circular descent in the bowl,” he said.


HHS ignored multiple AMI requests for comment. Queries to David Merritt, executive vice president for public affairs at the trade association America's Health Insurance Plans, also went unanswered on Tuesday. AHIP spokeswoman Clare Krusing pointed to an existing website statement saying that "the reinsurance program is working as intended," but did not respond to the specific questions raised by Cause of Action.