TRANSITIONAL REINSURANCE PROGRAM
The Transitional Reinsurance Program, funded by a new tax levied on all insurance companies, provides reimbursement to insurers that enroll high-cost individuals in health plans on the Obamacare exchanges. The Center for Medicare and Medicaid Services (CMS) oversees this program and is responsible for collecting and redistributing these dollars to insurance companies that are losing money.
The law mandates that CMS deposit $5 billion of the taxes collected from insurers into the U.S. Treasury to help cover some of Obamacare’s astronomical costs. This occurs through a set payment schedule over the first three years of the program. The law also prohibits CMS from using these dollars intended for the Treasury to reimburse health insurers through the reinsurance program. The law clearly states in section 1341(b)(4) that the fees “…shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program.”
But CMS has repeatedly broken the law’s plain text – and is stealing from taxpayers as a result. To date, CMS has failed to remit a single penny that it owes the U.S. Treasury under the Transitional Reinsurance Program. The law’s explicit instructions required CMS to pay $2 billion in 2014, $2 billion in 2015, and $1 billion in 2016. After responsible elected officials uncovered CMS’ unlawful activities, the agency promised to deposit $500 million into the Treasury by November, but there are no guarantees this will happen.
Taxpayers must receive the money they are legally owed. Legislation offered by U.S. Sen. Ben Sasse (S 2803) and Rep. Mark Walker (HR 5904), called the Taxpayers Before Insurers Act, would slash the administrative budget of the Department of Health and Human Services (HHS) to recoup the $5 billion owed to taxpayers. This deserves to be passed.
Members of Congress have received communications from insurers and other special interests demanding that any attempts to recover these dollars be stopped. The Obama administration has also joined with these special interests to demand that Obamacare’s reinsurance program be extended, potentially with taxpayer money. Lawmakers must resist these demands – taxpayers should not be on the hook for this failing law.”
The Risk Corridor Program insulates health insurers from extreme losses and gains stemming from their health insurance plan pricing. The program was never intended to be a subsidy for plans; rather, it was a program implemented to correct mispriced plans. In 2015 and 2016, Congress required that risk corridors remain budget neutral – as intended when the law was passed – which limits the program’s funds to those dollars collected from taxes on insurers.
Risk corridors threaten to expose taxpayers to another wasteful bailout. Since it cannot spend more money than it takes in, the program has consistently failed to raise enough funds to pay insurers for their massive losses – another sign of Obamacare’s significant design flaws. Insurers incurred $2.87 billion in losses but only gathered $362 million in risk corridor contributions.
Insurers and the Obama administration are now seeking to increase funding by any means possible. In a recent memo, Andy Slavitt, the acting CMS administrator, reassured insurers that CMS would pay all of its outstanding payments in full. Soon after, health insurers and health care co-ops began filing lawsuits to seek their full payment. This is a transparent attempt to manipulate the justice system to force taxpayers to bail out another failed Obamacare program.
Additionally, HHS released a new report indicating that they will “explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments.”
Billions of dollars are at stake if either the federal courts or Congress force taxpayers to bail out insurers for their losses. Members must be proactive to stop this bailout from occurring by expressly prohibiting this action.