New Memo Sounds Alarm On Legality of Health Law’s Risk Corridor Payments

February 4, 2014

WASHINGTON, DC – A new memo prepared by the nonpartisan Congressional Research Service raises serious questions about the ability of the Obama administration to pay insurers through the health care law’s risk corridor program. House Energy and Commerce Committee staff recently requested CRS address the appropriation of funds necessary to fulfill payments through the program. CRS explains, “While the language of ACA [Section] 1342 (B)(1) establishes a directive to the Secretary [of Health and Human Services] to make such payments, it does not specify a source from which those payments are to be made. Therefore, [Section] 1342 would not appear to constitute an appropriation of funds for the purposes of risk corridor payments under that section.”

HHS Secretary Sebelius testified in December and CCIIO Director Gary Cohen repeated again in January that the administration did not know how much taxpayers will be on the hook for under the health care law’s risk corridor program. The law’s flawed design and botched rollout put taxpayers in jeopardy of being on the hook to bail out the president’s health care law because of poor enrollment. 

“The underlying question is, does the administration have the authority to make the payments to the insurance industry? This memo raises serious questions on the legality of the administration’s plan, just the latest in a pattern of unilateral delays and actions outside the bounds of the law,” commented Energy and Commerce Committee Chairman Fred Upton (R-MI). “We must protect taxpayer dollars even as the administration rushes to cover up its failures in implementing the health law.”

Read the complete CRS memo online here.

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