GAO weighs in on reinsurance payments as feds seek risk corridor settlement

Two Affordable Care Act programs designed to stabilize the Affordable Care Act marketplaces continue to face legal and regulatory turmoil.  

report by the the Government Accountability Office (GAO) says the Department of Health and Human Services (HHS) must direct reinsurance payments back to the Treasury Department, even if those payments fall short of expectations. The report was released at the request of GOP lawmakers who previously accused Obama administration officials of having a “cozy” relationship with insurers by prioritizing payments to insurance companies over the Treasury.

The GAO indicated that HHS “lacks the authority” to ignore certain provisions of the Affordable Care Act that require the government to make payments to the Treasury through the reinsurance program, adding that HHS is not authorized to prioritize payments to insurers “regardless of whether its collections fall short of the amounts specified in the statute.”

For the 2014 benefit year, reinsurance collections fell well short of projections, leading HHS to allocate all of the funds toward payments to insurers, and none to the Treasury. For 2015, HHS predicts it will collect $6.5 billion, which also is short of initial projections, the GAO notes.

“This is about fairness and respect for the rule of law clearly anchored in the Constitution,” a group of seven lawmakers said in a statement. “This new opinion from the government’s top watchdog confirms that the Obama administration is not above the law. The administration needs to put an end to the Great Obamacare Heist immediately.”

Meanwhile, the Obama administration is looking to circumvent Congress’ cap on risk corridor payments through a settlement with insurers that are suing the federal government over payment shortfalls, according to the Washington Post. Despite warnings from GOP leaders not to settle the lawsuits, the Post reports Department of Justice officials are exploring an option that would pull money from an obscure Treasury fund reserved for legal claims against the government.