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These Documents Could Reveal Whether Obamacare Is Bailing Out Insurance Companies

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Nonprofit government watchdog Cause of Action (CofA) Institute filed a Freedom of Information Act (FOIA) request Thursday for documents related to the Obama administration’s decision to use legal settlements to bail out Obamacare’s failing health insurance companies.

Obamacare’s “risk corridor” initiative promised to use tax funds appropriated by Congress to compensate losses incurred by insurance firms participating in the government healthcare program. Losses under Obamacare, however, far exceed the funding Congress approved for compensation.

So federal officials defending against insurance company lawsuits seeking the compensation payments are eying shifting funds appropriated for other purposes to instead funded legal settlements of the risk corridor suits against the government.

That strategy, according to CofA, amounts to “inviting lawsuit settlements in order to work around a provision enacted by Congress. In 2014, Congress enacted a provision preventing the [Obama] administration from shifting funds into the risk corridors program.”

The CofA request seeks all documents related to a Sept. 9, 2016, memo issued by the Centers for Medicare and Medicaid (CMS) announcing the decision regarding the risk corridor settlements. The Obamacare program is managed by CMS.

“It appears the administration is attempting to circumvent the law by bailing out insurance companies through judicial settlements. Americans deserve to understand how far the administration is willing to go to prop up a failing program with taxpayer money,” CofA President and former federal judge Alfred J. Lechner, Jr said in a press release.

In the Sept. 9 memo, CMS said appropriated risk corridor funds for 2015 are dried up, as insurance companies scramble to cover the millions of new Americans required to have government health insurance and face larger-than-expected losses. (RELATED: Obamacare Is Causing Insurance Companies To Beg For Bailouts)

The memo said the agency is “open to discussing resolution of those claims” for companies still waiting on payments. (RELATED: Obama May Use Millions From Court Settlement Fund To Bail Out Failing Health Insurers)

A huge problem for the DOJ effort, according to CofA, is the fact the department’s Office of Legal Counsel (OLC) has determined such “backdoor payouts” from settlement funds are illegal.

“The Judgment Fund does not become available simply because an agency may have insufficient funds at a particular time to pay a judgment. If the agency lacks sufficient funds to pay a judgment, but possesses statutory authority to make the payment, its recourse is to seek funds from Congress,” the OLC said.

CofA Institute requested all records involving a lack of funds for risk corridor payments to insurance companies and all records related to the CMS memo. CMS has 20 business days to respond under FOIA.

Half of the state-run health exchanges have collapsed, and health insurance companies are quickly dropping out of state markets, leaving fewer insurance options for Americans. Most of the experimental health insurance co-ops established by Obamacare have also failed.

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