How the Secret Obamacare Bailout Breaks the Law

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The Obama administration is breaking the law again. In fact, it is willfully violating the law at the heart of President Obama’s legacy — the Affordable Care Act, also known as Obamacare. You know it’s a bad law when administration has to consciously violate it in order to make it work.


Think I’m joking? Think again. The Center for Medicare and Medicaid Services (CMS) is defrauding taxpayers in order to prop up insurance companies. Why? Because those companies are losing money, and they’re struggling because of the new regulations set up by Obamacare.

Nebraska Senator Ben Sasse is leading an effort to stop these actions. It is hilarious to hear a Republican senator call out a Democratic administration, not just for violating its own laws, but for doing so in a way that Democratic presidential underdog Senator Bernie Sanders has excoriated on the campaign trail. The Obama administration is effectively stealing from taxpayers to support the big insurance companies that helped write the law in the first place.

“This is an example of the administration’s lawlessness and cronyism,” Sasse declared on a call with reporters on Wednesday set up by the nonprofit Freedom Partners. “It’s lawless because HHS [Health and Human Services, a branch of CMS] is ignoring the clear text of the law, and it’s cronyist because it is putting the big insurance companies ahead of American taxpayers.”

“Cronyism” refers to a system of corporate welfare, where big businesses profit from cozy relationships with big government. The senator explained it simply: “They’re prioritizing the insurers and the lobbyists over our kids.”

Sasse quoted an explicit passage in the Affordable Care Act, which clearly designates $5 billion to the United States treasury, to be paid over three years: $2 billion each for fiscal years 2014 and 2015, and $1 billion for 2016. “This money shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program established under this section,” reads section 1341 of the bill, now designated federal law, 42 U.S.C. 18001.


Instead of the $5 billion explicitly mentioned in the law, CMS has agreed to pay $500 million for 2015, after paying nothing for 2014. The agency has still given approximately zero dollars and zero cents to the treasury.

Insurance companies are losing money under the new system, because coverage for individuals turned out to be more costly than their estimates expected. UnitedHealth, Aetna Inc., and even big Blue Cross and Blue Shield plans all posted losses from policies in 2015. UnitedHealthcare, the nation’s largest insurer, just pulled out of Obamacare exchanges in Georgia and Arkansas this month.

Perhaps to stem this inevitable tide, CMS projected that it will give $7.7 billion to insurance companies for “reinsurance payments” for the 2015 fiscal year. They gave insurance companies $7.9 billion for this in 2014. Meanwhile, the agency admitted that “$500 million will be allocated … to the General Fund of the U.S. Treasury.” This admission was cloaked in impenetrable language, so as to hide that the agency was deliberately violating the law.

In other words, CMS is only giving the treasury ONE EIGHTH of the money the law explicitly demands, and giving more than twice that to the big insurance companies which helped draft Obamacare in the first place. Try doing this with your taxes: pay less than a quarter of what the IRS demands and give the rest to your friends, and see how the government likes it.

Senator Sasse is not standing for it. He has submitted legislation which would hold CMS accountable for its lawbreaking ways. Sasse’s bill would cut the funding for a key budget at HHS in half if the agency does not deposit the full $4 billion in the treasury’s general fund. If CMS fails to send that money to the treasury in 2017, the bill would cut the funding in half yet again.


“Plain and simply, the taxpayers should receive the amount the law said,” Sasse declared. He argued that this should be a bipartisan issue. “Bernie Sanders and Elizabeth Warren should be able to agree…big insurers should not be favored over the taxpayers.” This is important, because any money not raised from CMS would come from higher taxes now, or more debt saddled on the backs of future generations.

Nathan Nascimento, a senior policy adviser and spokesman for Freedom Partners, also condemned CMS’s illegal actions. The agency “has no authority to secretly take billions of taxpayer dollars designated for the Treasury and use it to bail out the insurance industry,” he said. “The failures of the Affordable Care Act should fall on those responsible for the law, not the hardworking Americans already suffering from higher premiums and lower quality care.”

In no uncertain terms, Nascimento declared, “The Obama administration owes Americans $3.5 billion.”

This case illustrates how big business and big government work together to defraud the American people, and how difficult it is for Congress to hold agencies accountable, even when they flagrantly break the law.

“At a fundamental level, these health insurance bailouts are exactly why people are fed up with Washington,” Nascimento told reporters.

Bernie Sanders would “solve” the problem by nationalizing the entire healthcare industry, thus turning the courtship of big business and big government into a full marriage. Ted Cruz promises to scale back the size and scope of government, while Donald Trump promises to hire the “best people” to solve the problem (that sounds promising…). Unfortunately, if Hillary Clinton follows Barack Obama, we can expect a great deal more of this hidden cronyism at every level.




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