Obama Once Again Breaks His Own Law

Obama once again breaks his own law The nonpartisan Government Accountability Office (GAO), acting in its function as comptroller general, has concluded that the administration has implemented the Affordable Care Act's (Obamacare) reinsurance program in an illegal and impermissible manner. They were suppose to repay the Treasury first as the text of the statute requires, but instead with the stroke of his pen, Obama placed his first and highest priority on bailing out insurers.

In an opinion requested by numerous members of Congress, the GAO stated:

We conclude that HHH [Health and Human Services] lacks authority to ignore the statute’s directive to deposit amounts from collections under the transitional reinsurance program in the Treasury and instead make deposits to the Treasury only if its collections reach the amounts for reinsurance payments specified in section 1341. This prioritization of collections for payment to issuers over payments to the Treasury is not authorized.

Under the law that was passed, the reinsurance funds collected from employers had two distinct purposes: first, to repay Treasury for the $5 billion cost of a separate program in place from 2010 through 2013; and, second to subsidize insurers selling Obamacare plans to high-cost patients during the law’s first three years.

Anybody with any sense knew that collections from employers would turn out to be less than expected. So, in response, HHS prioritized the second objective to the exclusion of the first – an action that, according to the GAO, violates the statute. As the opinion noted, “the fact that HHS’s collections ultimately fell short of the projected amounts does not alter the meaning of the statute.” The memo continued that, because agencies must “‘effectuate the statutory scheme as much as possible’ . . . HHS continues to have an obligation to carry out the statutory scheme using a method reflective of the specified amounts even though actual collections were lower than projected.” This resulted in the GAO concluding that the Department has no authority to divert to insurers approximately $3 billion in reinsurance contributions that should be allocated to the Treasury.

The GAO's legal team found HHS’s justification for its actions unpersuasive:

HHS’s position regarding prioritization of collections for reinsurance payments appears to be driven solely by lower than expected collections. However, a funding shortfall does not give an agency “a hinge for enlarging its discretion to decide which [priorities] to fund.” The law isn’t a Chinese menu, where federal bureaucrats can pick and choose which portions they wish to follow. They must follow all of the law, as closely as possible — even the portions they disagree with.

The GAO agreed with the nonpartisan Congressional Research Service and with other outside experts, all who said that HHS had violated the law. The GAO’s recent opinion is not the first to smackdown the Obama administration's actions: In May, Judge Rosemary Collyer ruled that the Obama administration violated the constitution by spending funds on cost-sharing subsidies that Congress never appropriated. This administration simply doesn't care about the law.

More and more insurers are announcing they are leaving Obamacare’s exchanges — Blue Cross Blue Shield announced this month that it is pulling out of the Obamacare marketplace in Nebraska and in most of Tennessee. Given these setbacks, the return of $3 billion in taxpayer funds to the Treasury represents a blow to HHS’s bailout plan. It demonstrates the law’s fundamentally flawed design. The administration can only keep insurers offering coverage on exchanges by flouting the law to give them billions of dollars in taxpayer funds they do not deserve. Otherwise, the government is paying them off.

Conservatives should thank the members of Congress who requested this ruling, which helps to stop the flow of crony-capitalist dollars to insurers. More needs to done. Congress should also act to ensure that the administration does not fund through a backroom legal settlement the payments to insurers that Congress explicitly prohibited two years ago. When they return in November, they should find out why HHS acted in such an illegal manner in the first place and whether insurance-company lobbyists encouraged the administration to violate the statute’s plain text. I have my doubts anything will be done about it.

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