Andy Slavitt, GOP lawmakers spar over reinsurance payments

Republican lawmakers clashed with a top federal health official over reinsurance payments in a House subcommittee hearing Friday, with legislators accusing government officials of having a "cozy" relationship with the insurance industry, and using the reinsurance program as "an attempt to prop up Obamacare."

In opening remarks, Rep. Tim Murphy (R-Pa.) took issue with the Centers for Medicare & Medicaid Services' decision to prioritize reinsurance payments to insurance companies rather than the U.S. Treasury.  As part of the Affordable Care Act, CMS was required to deposit $2 billion from the program into the Treasury. But in 2014 the agency issued a new regulation allowing it to make full payments to insurers in the event of a shortfall. Since then, the program has fallen well short of its collection targets. Earlier this year, CMS paid $7.7 billion to insurers through the reinsurance program for the 2015 benefit year, and omitted payments to the Treasury.  

Murphy characterized the payments as a taxpayer-funded bailout, and raised concerns that there would be "some collapse in the health insurance market" once the reinsurance program ends.

CMS Acting Administrator Andy Slavitt defended the decision to prioritize payments to insurance companies, arguing that the agency used its standard rulemaking procedure--including requests for comments--to implement modifications to the program that were intended to "maximize the financial effect of the transitional reinsurance program."

"CMS received universal public support for the policy of returning payments back to cover claims as a first priority, and no one--not one commenter--questioned the legality or the appropriateness of the approach," he said.

Rep. Frank Pallone Jr. (D-N.J.), a ranking member of the Energy and Commerce Committee, also defended the reinsurance program, accusing Republican lawmakers of using "overblown rhetoric" and "blatant misinformation" to attack the ACA.

The ACA's reinsurance program has been a frequent target of Republican lawmakers, including Sen. Marco Rubio (R-Fla.) and Sen. Orin Hatch (R-Utah) who previously called the decision to reallocate payments "unacceptable."

To learn more:
- watch the hearing
- here is Murphy's statement
- see Pallone Jr.'s statement
- read Slavitt's statement

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