"HHS must stop cheating taxpayers."

Today U.S. Senator Ben Sasse (R-NE) introduced legislation to penalize the Department of Health and Human Services (HHS) for illegally prioritizing big insurance companies ahead of taxpayers through the Affordable Care Act’s reinsurance program.
 
“HHS must stop cheating taxpayers. The reinsurance program is a clear case of Washington’s cronyism: families are suffering Obamacare’s consequences but Washington bureaucrats are sending billions of dollars to well-connected insurance companies. Our legislation is simple: if HHS ignores the law to reward insurance companies, Congress will slash their operating budget. HHS must follow the law.”
 
Background: 
 
Like the Affordable Care Act’s risk corridor program, the reinsurance program is designed to protect big insurance companies.
 
The law requires the Secretary of HHS to deposit $5 billion total from 2014-2016 to Treasury through the reinsurance program. Rather than make those deposits to the Treasury, HHS has decided to prioritize payments to insurance companies.
 
Ignoring the clear text of the law, HHS has prioritized payments to insurance companies rather than payments to the Treasury: In 2014, the Treasury should have received $2 billion in general fund payments but received nothing even though HHS sent insurance companies the full $8 billion in reinsurance payments they requested. HHS also carried over another $1.7 billion to give insurance companies later. For 2015, HHS said they would give Treasury only $500 million of the $2 billion it should receive but insurers will receive a $7.7 billion payout ($6 billion for 2015 plus the $1.7 billion carried over from 2014). 
 
Today Senator Sasse introduced the “Taxpayers Before Insurers Act.” This legislation would slash 50 percent of HHS’ general departmental management fund unless the Secretary of HHS pays the full amount taxpayers are owed.
 
On Febrary 29, Sasse wrote to HHS demanding that the full amount “be deposited into the general fund of the U.S. Treasury before any additional amounts are paid to insurance companies.”  
 
Last night, Sasse received a response from HHS that explicitly said that taxpayers are third in line, behind insurance companies and HHS itself. The letter states: “CMS would allocate contributions that are collected first to the reinsurance payment pool and administrative expenses… Once those targets were met the remaining contributions collected for that benefit year would be allocated to the U.S. Treasury.”

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