Politics & Policy

Another Illegal Obamacare Bailout Appears to Be on the Way

(Photo Illustration: NRO)
Congress should stop another massive usurpation of its authority by an imperial executive.

As Ronald Reagan might say, “There they go again.” The Obamacare Perpetual Bailout Machine went into high gear again on Friday, in a typical late-afternoon news dump released by the Centers for Medicare and Medicaid Services (CMS). In a five-paragraph memo, CMS invited insurers to settle outstanding lawsuits regarding an Obamacare bailout program — providing K Street a handy roadmap to obtaining more of federal taxpayers’ hard-earned cash, which administration officials apparently will distribute to insurers on their way out the door.

The lawsuits revolve around Obamacare’s risk-corridor program, one of two ostensibly temporary programs, scheduled to expire this December, that provided a transition to the new Obamacare regime. Plans with high profits would pay into the risk-corridor program, and their spending would offset deficits incurred by insurers with large losses.

As with most things Obamacare, risk corridors haven’t turned out quite like the administration promised. In 2014, insurers paid in a total of $362 million into the risk-corridor program — but requested $2.87 billion in disbursements. Fortunately, an appropriations rider enacted in December 2014, and subsequently renewed, has thus far prevented CMS from using taxpayer funds to bail out the risk-corridor losses.

But where there’s a will to give a bailout, the Obama administration thinks it has a way. CMS in the last paragraph of its Friday memo states:

We know that a number of issuers have sued in federal court seeking to obtain the risk corridors amounts that have not been paid to date. As in any lawsuit, the Department of Justice is vigorously defending those claims on behalf of the United States. However, as in all cases where there is litigation risk, we are open to discussing resolution of those claims. We are willing to begin such discussions at any time.

Translation: “Insurers — you want a bailout? Come right in and let’s chat. After all, we’re here only until January 20 . . . ”

Apart from being bad policy — and a violation of Congress’s express language forbidding a taxpayer bailout — such a settlement could also violate the Justice Department’s own legal guidelines. Insurers are seeking to obtain from the Judgment Fund, the entity that pays out claims stemming from federal lawsuits, what they could not obtain from Congress. But a 1998 opinion from the Justice Department’s Office of Legal Counsel (OLC) called these backdoor bailouts improper and illegal:

The Judgment Fund does not become available simply because an agency may have insufficient funds at a particular time to pay a judgment. If the agency lacks sufficient funds to pay a judgment, but possesses statutory authority to make the payment, its recourse is to seek funds from Congress. Thus, if another appropriation or fund is legally available to pay a judgment or settlement, payment is “otherwise provided for” and the Judgment Fund is not available.

That’s exactly the situation facing CMS regarding risk corridors. Risk corridors are considered “user fees,” and CMS has a statutory appropriation to make those payments. But Congress explicitly prohibited CMS from using taxpayer funds to supplement those user fees. In other words, Congress has “otherwise provided for” risk-corridor payments — and insurers can’t use the Judgment Fund as an alternative source for bailout because they didn’t like Congress’s prohibition on a taxpayer-funded bailout.

Friday’s memo clearly indicates the Obama administration’s desire for some type of corrupt bargain on its way out the door.

At least, so say the Office of Legal Counsel in its 1998 memo (issued by the Clinton administration, remember), the comptroller general, and the non-partisan Congressional Research Service. But CMS, and possibly the Obama Justice Department, have other ideas. In defending the insurer lawsuits, Justice has not yet cited the OLC memo or made any claim that Congress, consistent with both the law and past precedent, should have the last word on any judgment. Friday’s memo clearly indicates the Obama administration’s desire for some type of corrupt bargain on its way out the door.

Congress could try to act legislatively to block a potential settlement, but it has another option at its disposal. Section 2(f)(2)(C) of the rules package adopted by the House of Representatives on the first day of the 114th Congress last January provided that “the authorities provided by House Resolution 676 of the 113th Congress remain in full force and effect in the 114th Congress.” That resolution, which led to the filing of the House v. Burwell case regarding Obamacare’s cost-sharing subsidies, gave the House speaker authorization

to initiate or intervene in one or more civil actions on behalf of the House . . . regarding the failure of the President, the head of any department or agency, or any other officer or employee of the executive branch, to act in a manner consistent with that official’s duties under the Constitution and the laws of the United States with respect to implementation of any provision of [Obamacare].

In other words, Speaker Ryan already has the authority necessary to intervene in the risk-corridor cases — to ensure that any potential “settlement” adheres to both Congress’s express will regarding bailouts and existing legal practice as outlined by both the comptroller general and the Department of Justice itself.

#related#Whether judicially, legislatively, or both, Congress should act — and act now. The time between now and January 20 is short, and the potential for mischief high. The legislature should go to work immediately to stop both a massive illegal bailout and another massive usurpation of Congress’s own authority by an imperial executive.

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