Lawmakers Lambaste $3 Billion in ACA Subsidies; DOJ Files Appeal

By Frank Klimko


As U.S. House Republicans criticized government reimbursements to health insurers for providing Affordable Care Act consumer subsidies, U.S. Justice Department attorneys filed an appeal to overturn a judge’s ruling that has invalidated the payments. 


The legality of the cost-sharing reduction program reimbursements, struck down by a federal judge in May, was the subject of a hearing by the House Energy and Commerce Oversight and Investigations subcommittee. The CSR is one of two subsidy programs – the other is the advanced tax credit program – that compensate insurers who enroll low-income consumers. 


The CSR program paid out about $3 billion to insurers in 2014, the committee’s report said. 


“We believe that the president illegally funded this program through the permanent appropriations meant to pay tax refunds,” said U.S. Rep. Fred Upton, a Michigan Republican. “The administration has gone to great lengths to prop up the health care law.” 


The committee also released a report, developed with the House Ways and Means Committee, that underlined their objections to the program. The report generally tracks the legal opinion rendered by Judge Rosemary Collyer, of the U.S. District Court for the District of Columbia. 


Collyer ruled the advance tax credits – which reduce insurance premiums on the federal and state health care exchanges – were appropriately funded through what is called the permanent appropriations process that provide funds until Congress repeals or modifies them. However, she found the funding for cost-sharing program – that reduce deductibles and co-pays for exchange participants – was not included in the permanent appropriations process (Best’s News Service, May 16, 2016). 


The DOJ filed a notice of appeal on July 6 with the U.S. Court of Appeals for the District of Columbia Circuit. 


“Despite statements by the administration,” the committee’s report said, “it has never been a principle of appropriations law that an authorized program can be funded from the account of another program simply for ‘efficiency’ purposes if Congress does not appropriate money to the program.” 


Witnesses at the hearing were critical of the payments. 


“Implementation of the cost-sharing reduction program has been irresponsible, unaccountable and at its heart, unlawful,” said Doug Badger, senior fellow, Galen Institute. “It is part of a pattern of malfeasance in ACA implementation occasioned by a general miscalculation about the attractiveness of individual qualified health plans to millions of people who lack health insurance coverage.” 


Simon Lazarus, senior counsel, the Constitutional Accountability Center, testified the reimbursements were legal. He said the two programs were integrated and the funding authority for the tax credits also applied to the CSR program. 


“The administration has determined that the premium tax credits and cost-sharing reductions are commonly funded by the permanent appropriation,” Lazarus said. “ACA opponents have mounted what amounts to a rerun of the same strategy for undermining a law they have not been able to invalidate or repeal.”

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