The Hill has a follow-up report on attempts by Republicans in Congress to block the bailout of insuers under Obamacare’s risk corridors program:
GOP lawmakers say they are looking at “a dozen” options — including a possible provision in the year-end spending bill — to prevent the administration from using an obscure fund within the Treasury Department to make massive settlements with insurers…
Lawyers for the House Energy and Commerce Committee are exploring whether the insurer settlements would comply with the law and if so, what kind of legislation could be passed to block it, said Rep. Morgan Griffith (R-Va.).
“We’re looking at ways to deal with that issue — mechanisms, either legislatively or judicially,” Griffith said. He said he has already reviewed some drafts of legislation that could go before the committee. “Eventually I think there’s going to be a piece of legislation, but we want to get it right.”
In case you haven’t been following this ongoing saga, the Obama administration set up a program under Obamacare which was designed to balance out gains and losses among insurers for the first three years of the law’s existence. This program, known as risk corridors, was a bust. The first year so many insurers lost money selling Obamacare plans that the amount of losses was 8 times the amount of windfall profits. That meant insurers lost about $2.5 billion they had been counting on recouping from the fund.
Naturally, the Obama administration’s plan was to simply pay out the missing money using taxpayer funds. Republicans, including Sen. Marco Rubio, saw this coming and added a provision to an omnibus bill which made risk corridors budget neutral. That meant that only money insurers paid into the risk corridors fund could be paid out. So, no bailout was possible.
The insurers, who still wanted their $2.5 billion, sued the administration claiming they were owed the money anyway. And the administration seemed to be encouraging that, stating that the money was in fact an obligation of the government, one that would be paid eventually.
Last month the administration announced it was considering a settlement with the insurers. That was seen by opponents of the bailout as a clever way to get around the fact that Congress had not appropriated any funds to pay insurers (in fact Congress had explicitly forbidden it). But a legal settlement could, in theory, be paid out of an existing appropriation called the judgment fund which exists to pay off lawsuit settlements.
However, it’s still not clear if it would be legal for the Obama administration to pay insurers using the judgment fund. Last week, GOP Senators sent a letter to Obama’s HHS Secretary pointing out that, according to the Congressional Research Service, a judgment fund payout would not be appropriate. The next day the Washington Post reported that the bailout was still on schedule and could happen in a couple weeks.
But there’s one more twist in this story. Last Friday Obama’s Department of Justice sought to dismiss two of the lawsuits it was reportedly eager to settle. And the language in the request for a dismissal was very blunt, stating that risk corridors payments are definitely not a government obligation.
That’s directly at odds with what the administration said earlier. So is the settlement/bailout still happening or has the administration reversed course? No one seems to know for certain, but based on this story today, Republicans are still behaving as if the settlement will go forward unless they stop it.