Republicans question Obamacare’s $5 billion early retiree ‘slush fund’

Matthew Boyle Investigative Reporter
Font Size:

House Republicans are challenging a slush fund they recently discovered in Obamacare — a $5 billion bailout for states, corporations and unions, dubbed the Early Retiree Reinsurance Program (ERRP).

At a Friday hearing in Energy and Commerce’s Subcommittee on Oversight and Investigations, Republicans alleged the Obama administration is passing out that $5 billion in taxpayer money to labor unions and companies it favors, like General Electric and General Motors — instead of using it to help early retirees obtain health insurance.

Also, the administration is racing through the $5 billion much faster than it previously projected — it was supposed to last until 2014, when no person will be denied coverage for a pre-existing condition. New statistics and projections, however, suggest it may run out before the end of 2012, and the Department of Health and Human Services (HHS) and the Center for Medicare & Medicaid Services (CMS) announced on Thursday they will no longer be accepting applications for subsidies after April 30. Between June 1, 2010, and Dec. 31, 2010, ERRP paid out $535 million, and during the first few months of 2011, ERRP has handed out another $1.3 billion.

According to Pres. Obama and Congressional Democrats, the program is meant to help early retirees who “often face difficulties obtaining insurance in the individual market because of age or chronic conditions that make coverage unaffordable or inaccessible.” But, Republicans on the Subcommittee say this “slush fund” is another reason they think Obamacare should be repealed.

Republicans took shots at Center for Consumer Information & Insurance Oversight (CCIO) Deputy Administrator Steven Larsen for how the administration decides who gets a slice of the $5 billion pie – and how the application process works. At the Friday hearing, Rep. Marsha Blackburn, Tennessee Republican, ripped Larsen because the program doesn’t require companies or labor unions to demonstrate a “financial need,” or that “they’re short of money or that they’re not going to be able to cover the cost of those that are enrolled in the plan that they are choosing to sponsor.”

Larsen said the companies and labor unions do, however, need to show they have a “current program” for early retirees. Also, because the Obama administration is not requiring companies to include details on any early retirement incentives in their applications, Blackburn said companies will likely encourage their employees to retire early, so they can get the taxpayer subsidies just to make their “bottom line” stronger.

“In order to make their bottom line look better, they could actually go to a universe of employees and say, ‘We’re going to incentivize your early retirement,’” Blackburn said. “And, then, move them into this plan that they’re going to submit an application to sponsor, then come to you with their hand out and say, ‘Hey, we need your millions, federal government.’ Do you not see why the American people are so frustrated with what you all are pouring out of these bureaucracies every day, on the American taxpayer? I mean, is this lost on you?”

Recipients of ERRP funding include the United Auto Workers union, which secured $206,798,086 in taxpayer money, AT&T, which took in $140,022,949, and General Electric (GE), which raked in $36,607,818. GE has made headlines recently for not paying any U.S. taxes last year. IBM got $12,989,690 in taxpayer money.

Verizon pulled $91,702,538 in taxpayer cash, too, and General Motors received $19,002,669. More than $6 million went to different Teamsters groups nationwide, and millions more went to the United Mine Workers, United Food and Commercial Workers, the AFL-CIO and the American Federation of State, County and Municipal Employees (AFSCME).

Ranking Subcommittee Democrat Rep. Diana DeGette of Colorado and Rep. Henry Waxman, California Democrat, complained that a witness they requested wasn’t allowed into the hearing as a result of Chairman Rep. Cliff Stearns, Florida Republican, wanting to focus it on questioning Larsen. Blackburn shot back at their complaint with a quip of her own, though.

“If my colleagues are wondering why we’re not calling, or if we’re going to call, other witnesses on programs such as this early retirement program, I think we need to call the American taxpayer, who is footing the bill for this and is livid with the lack of accountability and the lack of measurable results that they see coming from these programs,” Blackburn said. “It is hard to understand, in my book, why we would not repeal these programs when you look at this program and the burn rate of this money. I’m curious as to why you have flown through $1.3 billion over the last two and a half months.”