Sep 27, 2016

Blue Cross Blue Shield Realty Check

Post by Freedom Partners

Blue Cross Blue Shield (BCBS) has been circulating on Capitol Hill a memo purporting to set the record straight with “facts” about the Transitional Reinsurance Program. Unfortunately, BCBS doesn’t tell the full story, leaving out some inconvenient facts.

Don’t let their spin obscure the reality that the Obama administration is improperly diverting money designated for taxpayers to prop up insurance companies. Here’s a reality check:

BCBS RHETORIC: The Transitional Reinsurance Program receives no federal funds.

REALITY: The Transitional Reinsurance Program is funded by a tax on all insurance companies. Under the Affordable Care Act, $5 billion of the taxes collected must be deposited into the U.S. Treasury.

BCBS RHETORIC: Reinsurance payments to health plans have been below the amounts specified in the statute.

REALITY: Payments to insurers are in line with taxes they have paid. If BCBS wants more reinsurance money, it should volunteer insurance companies to pay additional taxes. There is no indication that insurers have been short-changed.

BCBS RHETORIC: The privately funded reinsurance program has reduced costs to taxpayers.

REALITY: Billions of dollars that should have gone to the general fund have instead been diverted to insurance companies with no guarantees that the money will ever be repaid, hardly a cost reduction to taxpayers.

HERE’S WHAT’S REALLY HAPPENING

The law mandates, under the Affordable Care Act, that CMS deposit $5 billion of the taxes collected from insurers into the U.S. Treasury to help cover some of Obamacare’s astronomical costs. This occurs through a set payment schedule over the first three years of the program. The law also prohibits CMS from using these dollars intended for the Treasury to reimburse health insurers through the reinsurance program. The law clearly states in section 1341(b)(4) that the fees “…shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program.” But CMS has repeatedly broken the law’s plain text – and is stealing from taxpayers as a result. To date, CMS has failed to remit a single penny that it owes the U.S. Treasury under the Transitional Reinsurance Program. The law’s explicit instructions required CMS to pay $2 billion in 2014, $2 billion in 2015, and $1 billion in 2016.

WHAT CONGRESS NEEDS TO DO

Insurance companies wanted the Affordable Care Act, but the law hasn’t worked out as expected. Now they want hardworking taxpayers to bail them out. Freedom Partners is calling on Congress to recover the $5 billion unlawfully given to insurance companies through the reinsurance program by passing the Taxpayers Before Insurers Act (S. 2803, HR 5904), which would recover $5 billion from the Department of Health and Human Services.

Additionally, Congress must proactively stop the administration from bailing out insurers under the Risk Corridors Program. Lawmakers can do this by expanding the budget neutrality provision, which prevents using taxpayer dollars to supplement the program, in addition to passing legislation barring the administration from using taxpayer dollars to settle insurance company lawsuits. This would prevent more public funds being used for bailouts—this program has already proven to be quite costly for taxpayers.

BACKGROUND

In February 2016, The Centers for Medicare and Medicaid Services Announced Reinsurance Payments “In Direct Violation Of The President’s Healthcare Law.” “Like clockwork, on a recent Friday heading into a holiday weekend, the Obama administration dumped some news – some pretty big and expensive news. The Centers for Medicare and Medicaid Services (CMS) announced reinsurance payments for the 2015 benefit year, which on its surface might appear bland. However, the payments amount to billions of dollars in handouts to insurance companies, and it’s taxpayers who are footing the bill. What’s worse, the handouts are in direct violation of the president’s health care law.” (House Energy and Commerce Committee, “Out Of Bounds: Obamacare Agency Stiffs Treasury, Illegally Funnels Billions to Insurers to Prop Up Health Law,” energycommerce.house.gov, 2/19/2016)

Rather Than Returning Billions To The Treasury As Required By Law, CMS Carried The Funds Over To The Following Year. “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 gave those funds to Obamacare issuers –unlawfully diverting money from taxpayers to insurance companies instead. For that year, the agency collected $9.6 billion i n assessments and paid out $7.9 billion – leaving $1.7 billion in excess funds. CMS then ultimately carried those funds over to the 2015 benefit year, denying the Treasury of the $2 billion they were required to remit.” (House Energy and Commerce Committee, “Out Of Bounds: Obamacare Agency Stiffs Treasury, Illegally Funnels Billions to Insurers to Prop Up Health Law,” energycommerce.house.gov, 2/19/2016)

$3.5 Billion Of Taxpayer Funds Improperly Paid To Insurance Companies Over The Past Two Years.“Fast forward to last Friday, when CMS said they would only remit $500 million of the required $2 billion for the 2015 benefit year. That means in the last two years, CMS gave insurance companies $3.5 billion.” (House Energy and Commerce Committee, “Out Of Bounds: Obamacare Agency Stiffs Treasury, Illegally Funnels Billions to Insurers to Prop Up Health Law,” energycommerce.house.gov, 2/19/2016)

“The Obama Administration Has Paid More Than $5 Billion To Insurance Companies, Despite Lacking The Legal Authority To Make These Payments.” “The committee leaders then expressed their concerns with payments the administration has been making to insurance companies under the health care law from a fund intended for tax refunds after the administration requested – but did not receive from Congress – an appropriation of funding. The Obama administration has paid more than $5 billion to insurance companies, despite lacking the legal authority to make these payments.” (House Energy and Commerce Committee, “Out Of Bounds: Obamacare Agency Stiffs Treasury, Illegally Funnels Billions to Insurers to Prop Up Health Law,” energycommerce.house.gov, 2/19/2016)