DOJ Appears to Side with Lee, GOP on Stealth Obamacare Bailouts

Sen. Mike Lee and other Republicans have expressed outrage over a Sept. 9 Health and Human Services memorandum that proposed using litigation as cover to bypass Congress and illegally funnel money to insurance companies struggling to survive under Obamacare. In a surprise move on Monday, the Justice Department appeared to signal in court that it agrees with the GOP, arguing that HHS cannot “become the uncapped insurer of the insurance industry itself.”

Reports The Hill (see also related Lee op-ed at The Daily Signal):

The Obama administration is seeking to toss out a pair of high-profile healthcare lawsuits in which insurers claim they are owed millions of dollars under the Affordable Care Act.

The two insurers, Moda Healthcare and BlueCross BlueShield of North Carolina, have sued the federal government over a combined $338 million in ObamaCare payments they argue are overdue.

The Justice Department filed motions to dismiss both lawsuits on Friday, arguing that the federal government isn’t responsible for those payments at all.

That argument — which goes further than the department’s move to dismiss a similar case in June — could have a major ripple effect throughout the marketplace.

Tim Jost, a health policy professor and long-time observer of the Affordable Care Act, said the federal government is now digging in on the merits of the cases for the first time. 

“It seems to me that HHS is clearly changing its position in these cases,” Jost said Monday. “The motions filed in both of these cases is a full-throated repudiation of any obligation [of the payments.”

Both lawsuits involve a piece of the Affordable Care Act intended to reduce risks in the new marketplace known as the “risk corridors” program.

Though the funding program became law as part of ObamaCare in 2010, Republicans in Congress have since passed budget rules that restrict those payments, resulting in a major shortfall.

Insurers had paid $363 million into the program during its first year in 2014, but that total was ultimately far short of the $2.87 billion in payments sought by insurers to make up for poorer finances that year.

Moda argues it is owed $191 million from 2014 and BlueCross BlueShield says it is owed $147 million. The Obama administration has not yet released payment data from the 2015 year, though it plans to do so in December 2016, according to the filing.

In their new documents, Justice officials argued that the Department of Health and Human Services (HHS) does not owe that money to insurance companies, in part because Congress has “directly spoken” about its intent to limit the use of federal dollars into the program.

“Under Moda’s interpretation, HHS would be the uncapped insurer of the insurance industry itself,” the Justice Department wrote. “Congress did not intend that result.”