A nonpartisan government watchdog said Thursday that the Obama administration is violating the law by directing funds in an ObamaCare program to insurers instead of to the U.S. Treasury.
Republicans, who had argued that the payments were illegal, hailed the Government Accountability Office (GAO) opinion.
At issue is ObamaCare’s so-called reinsurance program, which is designed to stabilize the market and protect against premium hikes in the early years of the healthcare law. Under the program, the government collects money from insurers and then gives it to plans with high-cost enrollees.
The reinsurance program was designed to collect $10 billion in 2014, its first year of existence, and another $2 billion that would be deposited into the Treasury.
But the program didn’t bring in nearly enough money to cover those amounts. So the administration, through regulations in 2014, prioritized giving money to insurers. None of the money was given to Treasury for the first year.
The GAO ruled on Thursday that this move violated the text of the law.
“This prioritization of collections for payments to issuers over payments to the Treasury is not authorized,” the agency said.
The administration had argued that it had discretion to prioritize the payments because not enough money came in to make them all.
But the GAO rejected that argument from the Department of Health and Human Services (HHS), pointing to the text of the law.
“The fact that HHS’s collections ultimately fell short of the projected amounts does not alter the meaning of the statute,” it said.
The GAO said the administration instead could have made payments proportional to what the law intended.
HHS disputed the GAO’s findings and noted it went through a public rulemaking process on its decision-making.
“CMS has implemented the Transitional Reinsurance Program lawfully and in a transparent manner, and strongly disagrees with today’s GAO opinion,” HHS spokesman Matt Inzeo said, referring to the federal Centers for Medicare and Medicaid Services. “This critical program, which expires this year, helps to reduce premiums for consumers.”
The reinsurance program is one of a trio of ObamaCare programs — which Republicans often call a “bailout” for insurance companies — meant to provide stability for insurers and protect against heavy losses or premium hikes.
Problems with these programs have contributed to financial losses that have recently led major insurers to drop out of marketplaces and raise premiums.
The administration, in its comments to the GAO, argued that it shifted more funds to insurers through the reinsurance program, in part, to prevent premium hikes.
The administration’s move “furthers the statutory goals of the program by bringing more certainty to the individual market and helping moderate future premium increases,” HHS argued.
A group of seven Republican congressional chairmen called on the administration to stop prioritizing the payment to insurers over the Treasury.
“The Administration needs to put an end to the Great Obamacare Heist immediately,” they wrote in a statement.