GOP Report: Obamacare cost-sharing payments violated the Constitution

The Majority staff for two House Committees have released a report which concludes the Obama administration broke the law and violated the Constitution by making billions in Obamacare cost-sharing payments without congressional authorization.


There are two major payments set out under Obamacare. First, premium tax credits, often referred to as subsidies, offset the monthly cost of insurance. Second, cost-sharing reductions are payments made to insurance companies to offset high deductibles and other out-of-pocket costs. The Obamacare law included a permanent appropriation of money to pay for the premium subsidies but not for the cost-sharing payments.

The report issued Thursday demonstrates that the Obama administration initially recognized it did not have any authority to make these cost-sharing payments to insurers. The NY Times reports:

The Republican report says the administration’s treatment of the tax credits as it began setting up a new payment system validates the Republican criticism of the cost-sharing subsidies. The report notes that while the authority for the tax credit was undisputed, the administration itself could identify no funds available for the cost-sharing element.

A previously undisclosed 2012 Treasury Department memorandum included in the report stated “there is currently no appropriation to Treasury or to anyone else, for purposes of the cost-sharing payments to be made.” It adds that the eventual basis for making them “can be determined only in connection with whatever statute ultimately appropriates funds for the cost-sharing program.”

Republican investigators say the view that even the administration believed it needed to find new money was further bolstered by the administration’s decision in April 2013 to seek a nearly $4 billion annual appropriation for the cost-sharing program in its budget.


So Treasury could not identify a funding source and the administration went to Congress to ask for $4 billion in funding which clearly indicates it believed an appropriation from Congress was needed. But then the administration reversed course and withdrew that appropriation request during a phone call, not in writing as would normally be the case. The Office of Management and Budget (OMB) then prepared a memo authorizing the payments without an appropriation.

The report says efforts by Congress to explore the administration’s decision were met with an “unprecedented” level of obstruction. From the executive summary of the report:

For well over a year, the committees have steadily pursued requests for documents and testimony about the Administration’s funding of the CSR program. Using a number of different
tactics, the Administration has impeded and obstructed the investigation at every turn. This level of obstruction by an Administration is unprecedented at both the Committee on Energy and Commerce and the Committee on Ways and Means…

The Administration further instructed witnesses not to answer purely factual questions—including questions seeking the names of individuals involved in decisions about the source of
funding for the CSR program, or confirmation of the occurrence of meetings about the CSR program. When asked what barred the witnesses from answering these questions,
Administration lawyers explained that the Executive branch has “confidentiality interests” and “heightened sensitivities” that allow it to withhold this information from Congress. When asked to explain the basis of those “interests” and “sensitivities,” Administration lawyers refused to do so. No such legal privilege exists—nor has one ever existed—that supports the Administration’s position that it can withhold purely factual information from Congress.

The position of the Administration—that it can unilaterally block from disclosure to Congress the answer to any question that seeks internal or interagency communications, or an
undefined “confidentiality interest,” or even a fact that it does not want Congress to know—effectively exempts the entire Executive branch from congressional oversight.


The report concludes there is only one justification for this level of obstruction: The Obama administration violated the law and the Constitution:

the Administration’s actions make clear it believes congressional oversight to be an unnecessary nuisance. As a result, the committees are left with no choice but to conclude that the Administration has intentionally obstructed this investigation. The Administration did so because it broke the law and violated the Constitution in funding the CSR program through the permanent appropriation for tax refunds and credits.

In May, a federal judge sided with the GOP saying the administration’s cost-reduction spending was unconstitutional. That ruling, which blocked further cost-sharing payments, was stayed while the Obama administration makes an appeal.

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David Strom 4:30 PM | May 28, 2024