Johnson, Sasse Demand Answers From Health And Human Services Over Failure To Return Payments To Taxpayers
Obamacare established the transitional reinsurance program to alleviate financial risks and burdensome costs imposed by the Affordable Care Act (ACA). Under the transitional reinsurance program, for benefit years 2014, 2015 and 2016, the
"Obamacare has been nothing but broken promises and wasted taxpayer dollars," said Chairman Johnson. "First it was, 'If you like your health care plan and doctor, you can keep them', and American families would see premiums decline by as much as
"Here's what this is about: HHS is putting insurance companies ahead of taxpayers and that's textbook
The letter can be found here http://www.hsgac.senate.gov/download/chairman-johnson-and-senator-sasse-letter-to-hhs-secretary-burwell and below:
The Honorable
Secretary
Dear Secretary Burwell:
The ACA created three risk mitigation programs to alleviate the financial risks and burdensome costs imposed by the ACA. One of the programs, the transitional reinsurance program, was designed, in part, to "stabilize premiums in the individual [health insurance] market" in the wake of anticipated market disruptions that would necessarily follow the implementation of the ACA. The transitional reinsurance program was also designed to provide an offset for the ACA's significant new spending. Under the transitional reinsurance program, HHS collects monetary contributions from health insurance issuers and group health plans; in turn, HHS redistributes those contributions among insurers that provide individual plans and deposits a portion of the contributions into the general fund of the
The ACA established mandatory collection amounts for benefit years 2014, 2015, and 2016, and specified the parameters for HHS's distribution of the collected funds. The ACA required HHS to collect a total of
HHS issued regulations in 2013, 2014, and 2015 that established annual assessment amounts for insurers to pay per-enrollee so that HHS could collect the contribution amounts mandated by the ACA. HHS determined that for the 2014 benefit year, to meet its statutory requirements, it would collect
In reality, HHS collected far less in reinsurance contributions than the ACA requires. For benefit year 2014, HHS collected only a total of
Despite collecting 20 percent less than it projected in benefit year 2014, HHS did not modify its collection methodology for the 2015 benefit year. Unsurprisingly, then, HHS miscalculated the per capita contribution rate needed in order to meet its statutory obligations. For the 2015 benefit year, HHS announced that it anticipated it would collect only
During the rulemaking process, HHS received public comments about its proposed contribution rate for benefit year 2014. Several commenters "asked HHS to defer the collection of the
It appears, however, that HHS reversed course when it became clear that it had miscalculated the per capita contribution and would be unable to meet its statutory obligation both to insurers and taxpayers. In subsequent reinsurance regulations, HHS proposed:
[I]f collections fall short of our estimates for a particular benefit year, we propose to alter the allocation so that the reinsurance contributions that are collected are allocated first to the reinsurance pool and administrative expenses, and are allocated to the
In its final regulation, HHS claimed it had the legal authority under section 1341 to "determine the priority, method, and timing for the allocation of reinsurance contributions collected" because the statute was silent on "how HHS should approach the distribution of reinsurance contributions if insufficient amounts are collected to fully fund all three components of the program (that is, reinsurance payments, administrative expenses, and payments to the
HHS's position that it may prioritize payments to insurance companies over taxpayers--and, subsequently, the payment scheme it operated under the transitional reinsurance program for the benefit years 2014 and 2015--is not consistent with the law. First, nothing in the ACA's text or structure contemplated that HHS would be unable to fully finance the transitional reinsurance program because section 1341 requires HHS to develop a methodology that collects a clearly-defined amount of money for benefit years 2014, 2015, and 2016. HHS's failure to collect this amount of money is itself a violation of the law. The statute's silence with respect to the allocation of insufficient collections under the transitional reinsurance program simply does not give HHS the authority to prioritize payments in the event it fails to collects sufficient funds.
Second, HHS argued that section 1341 permits prioritization of payments to reinsurance-eligible insurers over payments to the
HHS argued that the use of the word "reflects" in this provision is "permissive language." As a result of this peculiar interpretation HHS essentially interpreted the text of the ACA to say that each issuer's "proportionate share" of contributions allocable to the
This interpretation directly conflicts with the plain language of section 1341, which requires that that a proportionate share of aggregate
Because HHS has not followed plain language of the ACA, the
1. HHS used the same flawed methodology to calculate the uniform reinsurance contribution rate for 2014, 2015, and 2016 collections despite its clear failure to yield adequate collections for the 2014 benefit year.
2. For benefit years 2015 and 2016, why did HHS not adjust the calculation to improve its accuracy in meeting the statutory requirements of the ACA?
3. What, if any, analysis did HHS conduct concerning the calculation methodology and adjustments to the methodology?
4. Please provide all communications referring or relating to HHS's calculation methodology and its consideration of adjustments to the methodology after HHS became aware of the shortfall.
5. When did HHS realize that the collection rate of
6. When did HHS realize that the collection rate of
7. Has HHS determined whether collections will be sufficient to fully pay the
8. Does HHS plan to contribute to the
9. Please provide all documents and communications referring or relating to HHS's decision-making process that resulted in HHS's prioritization of payments to insurance companies over payments to the
10. Please provide a record of all meetings with all persons associated with the comments HHS received in favor of the agency's ability to prioritize reinsurance payments.
Please provide this material as soon as possible but no later than
For purposes of this request, please refer to the instructions and definitions contained in the enclosure. When delivering production sets, please produce to Majority staff in room 340 of the
Sincerely,
Chairman
cc: The Honorable
Ranking Member
Read this original document at: https://www.hsgac.senate.gov/media/majority-media/johnson-sasse-demand-answers-from-health-and-human-services-over-failure-to-return-payments-to-taxpayers
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