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THE GREAT OBAMACARE HEIST: Former White House Counsel Finds Obamacare Reinsurance Scheme “Unlawful” and “Cannot Withstand Scrutiny”


05.23.16

In New Report, C. Boyden Gray Concludes: “HHS allocation scheme prioritizing payments to reinsurance-eligible issuers over payments to Treasury is unlawful.”


WASHINGTON, DC – The list of legal experts weighing in against the Obama administration’s reckless abandonment of the rule of law continues to grow. C. Boyden Gray, former White House Counsel to President George H. W. Bush, weighs in today on the Great Obamacare Heist – the administration’s illegal efforts to divert billions of taxpayer dollars from the U.S. Treasury to insurance companies over the Treasury.

Section 1341 of Obamacare mandates that $2 billion of the reinsurance assessments collected for the 2014 and 2015 benefit years be returned to the U.S. Treasury Department. Last fall, CMS ignored the clear text of the law and instead redirected those funds to Obamacare issuers. The law is clear: This money “shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program established under this section” (click here to read Sec. 1341, pgs. 90-93, quoted from bottom of page 92).

In the opinion that was commissioned by the Galen Institute, Boyden Gray details:

“TRP has failed to collect funds sufficient to fully finance both payments to reinsurance-eligible issuers and to Treasury. But because HHS has prioritized the former over the latter, by the time the books close on TRP for the 2014 and 2015 benefit years at the end of 2016, reinsurance-eligible issuers will likely have received 98% of expected payments ($15.6 billion out of an expected $16 billion), whereas Treasury will likely have received only 12% of expected payments ($495 million out of an expected $4 billion).

 “HHS’s allocation scheme prioritizing payments to reinsurance-eligible issuers over payments to Treasury violates the ACA. Speaking in mandatory terms, the ACA unambiguously requires HHS to implement a collection methodology that collects defined amounts that fully finance TRP’s required payments to both Treasury and reinsurance-eligible issuers.”

Boyden Gray goes on to conclude:

HHS allocation scheme prioritizing payments to reinsurance-eligible issuers over payments to Treasury is unlawful. The ACA unambiguously prohibits HHS from implementing a collection methodology that produces persistent deficits. Accordingly, TRP’s implementation does not require any prioritization scheme to address the allocation of contributions in the event of a deficit. Even if the statute admitted of persistent deficits— and it does not—HHS’s rationales for prioritizing payments to reinsurance-eligible issuers over payments to Treasury cannot withstand scrutiny.”

Last week, committee leaders offered the administration a last chance to provide basic information regarding the program. If the administration does not comply with the request, the leaders will have no choice but to issue a subpoena.

Read the legal opinion online HERE.

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