GOP seeks to block ObamaCare settlements with insurers

Republicans in Congress are plotting ways to block the Obama administration from paying insurance companies hundreds of millions of dollars as part of an ObamaCare program. 

GOP lawmakers say they are looking at “a dozen” options — including a possible provision in the year-end spending bill — to prevent the administration from using an obscure fund within the Treasury Department to pay out massive settlements to insurers.

{mosads}The insurance companies are suing over a shortfall in an ObamaCare program that they say is damaging their businesses. 

Settling the cases could help insurers deal with losses on the ObamaCare marketplaces, but Republicans argue the move would be a “bailout” that would circumvent the will of Congress. 

Whether federal officials will actually pursue the settlements is an open question.

Any settlement between the Justice Department and health insurers would likely come out of the so-called judgment fund, a pool within the Treasury that is typically used in federal legal disputes.

Lawyers for the House Energy and Commerce Committee are exploring whether the insurer settlements would comply with the law and if so, what kind of legislation could be passed to block it, said Rep. Morgan Griffith (R-Va.).  

“We’re looking at ways to deal with that issue — mechanisms, either legislatively or judicially,” Griffith said. He said he has already reviewed some drafts of legislation that could go before the committee. “Eventually I think there’s going to be a piece of legislation, but we want to get it right.”

Sen. John Barrasso (Wyo.), a member of Senate Republican leadership, said that his party is considering inserting language into the year-end funding bill.

“There is a role for Congress to play,” on the issue, Barrasso said. “You can’t imagine that President Obama would sign such a law, so you’re now talking about, do you try to include it in one of the end-of-the-year funding packages like we’ve done in the past.”

At issue is an ObamaCare program called risk corridors, which was designed to cushion insurers against heavy losses in the early years of the law by shifting money from insurers faring better to those faring worse.

But nowhere near enough money has come in to cover the payouts, meaning insurers were left with a hole in their balance sheets on top of other ObamaCare-related problems they were already facing. Insurers paid $363 million into the program in the first year, far short of the $2.87 billion sought by insurers.

Some insurers have cited that shortfall as a reason they are withdrawing from ObamaCare marketplaces altogether this year. The absence of the funding has also taken a toll on the 23 state startup insurance companies, known as co-ops, established under ObamaCare. Only six of those co-ops remain in business. 

Insurers could receive at least some of the money they say they are still owed through legal settlements with the administration.

Conservatives have condemned the use of the judgment fund as an attempt to get around Congress, which passed legislation in a funding bill in 2014 to limit the administration’s ability to pay out money to insurers under the risk corridor program.

Federal officials have not given a clear signal on whether they intend to settle.   

The Department of Justice filed motions to dismiss two of the insurer lawsuits last week, forcefully arguing that the government doesn’t actually owe them any money because Congress has since passed legislation limiting the funds. 

But a memo from the Centers for Medicare and Medicaid Services (CMS) last month raised alarm bells for Republicans by indicating that the administration is open to settling the lawsuits. “We are willing to begin such discussions at any time,” the memo said. 

After the memo, Griffith said his staff warned him: “This is the tip of the iceberg.”

Similarly, acting CMS Administrator Andy Slavitt indicated at a hearing last month that his agency has spoken with DOJ about potential settlements.

Last month, 46 House Republicans, led by Rep. Robert Pittenger (N.C.), wrote to HHS Secretary Sylvia Mathews Burwell saying they are committed to “exhausting all legislative and judicial options” to block the settlements.

Ten insurers have filed lawsuits, according to documents provided to the Energy and Commerce Committee. About 175 insurers overall are owed money in the fund and could still take legal action.

Energy and Commerce Committee Chairman Fred Upton (R-Mich.) on Tuesday wrote to insurers that have sued over the risk corridor funds requesting a briefing for committee staff and copies of any emails they have had with the administration over potential settlements.

A spokeswoman for the committee said Wednesday “all options are on the table.”