IRS had concerns about legality of Obamacare payments that are subject of GOP lawsuit

Accountants at the IRS had concerns about the legality of “cost sharing” payments to insurers which are the subject of a lawsuit brought by House Republicans against the White House. The subject of the lack of a permanent appropriation for the payments was raised by the IRS in 2014. In response the White House Office of Management and Budget held a meeting to reassure IRS officials the payments were legal. The Hill reports:

“My understanding, through the accounting folks, is that the IRS had raised some concerns and was looking for, whether it was a legal analysis or something more authoritative that would provide confidence that these payments were, in fact, authorized out of the permanent appropriation,” Fisher said.

Fisher said the IRS requested a meeting with the White House Office of Management and Budget (OMB) to get its perspective on the legality of making the payments.

That meeting occurred on Jan. 13, 2014, at the Eisenhower Executive Office Building across from the White House, Fisher said, with officials from the OMB and the IRS.

The IRS officials received a memo written by OMB attorney Sam Berger that laid out a legal justification for making the payments, Fisher said. He added that the IRS officials were told not to take notes and were not allowed to keep copies of the memo at the end of the meeting, an arrangement Fisher called “a little unusual.”

The cost sharing payments to insurers are the focus of a lawsuit brought by the House GOP against the White House. Earlier this month a federal judge sided with the GOP saying in her decision, “Congress is the only source for such an appropriation, and no public money can be spent without one.” Politico reported the exact number of people receiving the subsidies is unknown but is greater than half of all enrollees:

Several million Obamacare customers receive cost-sharing subsidies, but the exact figure is unknown. As of the middle of the last Obamacare enrollment period, 57 percent of people who signed up for coverage through the federal exchange on receive them.

If the cost-sharing subsidies are eliminated, government actuaries estimate that insurers would increase premiums — up to 20 percent to 30 percent for silver-tiered plans — to make up for the loss. As a result, the premium tax credits would increase, at a higher cost to the federal government, according to the Department of Health and Human Services.

The Obama administration is appealing the decision to the D.C. Circuit Court of Appeals.

Jazz Shaw Aug 07, 2022 2:31 PM ET