Senators express ‘grave concerns’ about ObamaCare ‘bailout’

Republican senators are pressing the Obama administration for information on what they say could be a “bailout” of insurance companies under ObamaCare. 

Sens. Marco Rubio (Fla.), Mike Lee (Utah), Ben Sasse (Neb.) and John Barrasso (Wyo.) wrote a letter to the administration warning against financial settlements with insurance companies. Those companies have sued over a shortfall in an ObamaCare program known as risk corridors.

{mosads}“We write to express our grave concerns regarding the potential participation of your departments in a multibillion dollar bailout of select health insurance companies through the Affordable Care Act’s Risk Corridors Program,” the senators wrote in the letter to Attorney General Loretta Lynch, Secretary of Health and Human Services Sylvia Mathews Burwell and Centers for Medicare and Medicaid Services (CMS) Acting Administrator Andy Slavitt.

The risk corridor program was intended to guard against heavy losses for insurers in the early years of the healthcare law by shifting money from insurers faring well to insurers faring poorly. But nowhere near enough funds came in to cover the payouts, and a Republican-backed provision passed by Congress has prevented the administration from shifting in other money to make up the difference.

That left a huge hole in insurer finances, contributing to complaints from insurers that have in some cases been dropping out of the health law’s marketplaces, citing financial losses. 

Rubio, who is in the midst of a tight Senate reelection race, was a champion of the limitations on risk corridor funding. 

Now, the senators warn that the administration could be trying to find a way to get the risk corridor money to insurers anyway, potentially through settlements at the Department of Justice (DOJ).

The payout to insurers could be made from a “judgment fund,” a pot of money used to pay settlements. The senators point to a Congressional Research Service (CRS) report from January to argue that in this case, payments out of that fund would be illegal, because the funds have been otherwise provided for through appropriations from Congress. 

“The Judgment Fund would not appear to be available to pay for such judgments under current law,” the CRS found. 

In their letter, the senators asked the administration where it plans to get the funds for any settlements with insurers. 

Administration officials, pressed by House Republicans at hearings earlier this month, hinted that there are discussions underway about settlements. 

Rep. Morgan Griffith (R-Va.) asked Slavitt this month if anyone in his department has had discussions with the DOJ about settling the lawsuits with insurers.  

Slavitt indicated the answer is yes.

“I know that our general counsel speaks to Justice regularly, so I assume that they have, but I don’t know any details,” Slavitt said.  

Furthermore, in a notice the CMS put out this month, the agency invited insurers to discuss settlements over the risk corridor issue. 

“As in all cases where there is litigation risk, we are open to discussing resolution of those claims,” the CMS said. “We are willing to begin such discussions at any time.” 

At another hearing this month, CMS Chief of Staff Mandy Cohen declined to say if her department believes the judgment fund could be used for these settlements. 

“I’d have to talk to my lawyers on that, so I can’t speak to that,” she said. 

The CMS on Wednesday referred questions about whether it believes the judgment fund could be used to the Department of Justice. 

The DOJ declined to comment on whether it believes the judgment fund could be used.

“The Justice Department declines to comment on these matters that are pending litigation,” said spokeswoman Nicole Navas.  

Senators Request Answers from DOJ, HHS on Potential Multimillion Dollar Insurance Company Bailout by Senator Mike Lee on Scribd