09.30.14

GAO: Obama Admin Has No Legal Authority To Make Risk Corridor Payments Without Congressional Action

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, and U.S. Rep. Fred Upton (R-MI), Chairman of the House Energy and Commerce Committee, released the following statements today after the Government Accountability Office issued a legal opinion at their request regarding the risk corridor program in Obamacare:

“GAO has confirmed beyond dispute that the Department of Health and Human Services has no legal authority to disburse risk corridor payments under Obamacare absent a congressional appropriation,” said Sessions. “I hope this nips in the bud any ideas this overreaching Administration might have of paying out money not appropriated by Congress. Such expenditures would violate bedrock separation of powers principles in the Constitution.”

“Following the law matters. We had serious concerns with the legality of the Obama administration’s plan from the get go, and the government’s watchdog confirms we were right,” said Upton. “Today’s report sounds the alarm once again on the Administration’s efforts to unlawfully subsidize its health care law with taxpayer dollars. American taxpayers are already on the hook for a still-incomplete health exchange with a price tag that exceeds $2 billion.” 

BACKGROUND:

The risk corridor program is a feature of the President’s health law that limits the profits or losses that an Obamacare-participating insurer can accrue. Insurers that make a profit above a certain amount must remit a portion of that profit to the government, with the funds being deposited into an account used to reimburse insurers that suffer excessive losses. In the President’s FY 2015 budget, HHS quietly tried to reclassify risk corridor funds in such a way that would have allowed them to disburse money without being subject to the oversight of the congressional appropriations process.

GAO’s opinion corroborates an earlier report that the Congressional Research Service prepared for the Senate Budget Committee, which reached the same conclusion.