GOP Warns New HHS Chief Burwell On Obamacare Insurer Bailout

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Several top Republicans sent a letter to new Health and Human Services Secretary Sylvia Burwell Wednesday warning her against making unlawful risk corridor payments to insurers taking part in Obamacare exchanges.

Rep. Fred Upton, chairman of the House Energy and Commerce Committee, and Sen. Jeff Sessions, ranking member on the Senate Budget Committee, wrote to newly confirmed Burwell Wednesday, documenting several federal reports that found that the Obamacare administrative agency doesn’t have the power to make the insurer payments with Congress appropriating the funds.

The risk corridor provisions of the health-care law, seen by some as an insurer bailout, allow HHS to collect payments from insurance companies participating in Obamacare exchanges and redistribute the funds to insurers with the sickest patients and highest medical costs. The provision grew even more controversial in May after HHS published a rule under former secretary Kathleen Sebelius’s tenure that allowed for additional taxpayer funding, as well as payment from insurance companies, to be doled out to insurers. (RELATED: Obama Admin Rule Opens Door To Insurance Company Bailout) 

The way the health-care law was written, the committee argues, shows that “Congress deliberately chose to review funding for the risk corridor program through the annual appropriations process.”

The committee documented a January Congressional Research Service memo which found that while the text of Obamacare directs the HHS secretary, now Burwell, to make insurer payments, it does not say where the money for the payments should come from.

Under longstanding appropriations law from the nonpartisan GAO, the committee argued, that prevents Burwell from making any such payments without Congress making the money available.

“Despite the overwhelming factual record that should foreclose any such efforts, HHS has left open the possibility that it will make payments to health insurance companies under the risk corridor program without seeking additional funding from Congress,” the committee wrote.

The committee requested that Burwell respond with her view on the legal analysis provided by GAO and CRS, which limit Burwell’s ability to make sure payments, and any legal analysis done by HHS itself. They also requested a list of funding sources HHS believes it could use in the absence of a congressional appropriation of funding.

The risk corridor provisions are key for insurers to be able to keep Obamacare insurance premiums artificially low. Two risk corridor provisions, however, are only temporary and will be phased out by 2016 — sparking leading economists to warn that premium rate hikes will hit hardest the year after.

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