The Department of Health and Human Services can't unilaterally make payments to insurers under the Affordable Care Act as a way of making up for unexpected losses, the Government Accountability Office said in a legal opinion.
In a letter to Sen. Jeff Sessions (R-Ala.) and Rep. Fred Upton (R-Mich.), GAO General Counsel Susan Poling determined that Congress must first approve specific language that permits the risk corridor program, which allows HHS to bail out money collected from successful insurers to those that had higher-than-expected losses, FierceHealthPayer previously reported.
The GAO legal opinion is in response to the lawmakers' request for clarification regarding HHS's authority over the risk corridor funds.
"The making of an appropriation must be expressly stated in law," Poling wrote. "It is not enough for a statute to simply require an agency to make a payment." She added that the ACA risk corridor provision didn't enact an appropriation to make the payments.
What's more, Poling added that Congress could pass more restrictive language in the future and would essentially prevent HHS from making risk corridor payments to insurers that are more than the amount collected through the program from other insurers.
In March, HHS implemented a state-level adjustment to make risk corridors budget neutral. But after insurers pushed back on the proposal, HHS issued a rule promising insurers they can count on government funding if higher-than-expected losses occur.
The "three R's" of the ACA have been under scrutiny of critics who believe risk corridors, reinsurance and risk adjustment are most certainly bailouts, while other supporters praise the programs as ways to keep premiums in check.
To learn more:
- read the GAO legal opinion (.pdf)