Health Reform WK-EDGE Bill would bar HHS from using Judgment Fund for ‘illegal bailouts’
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Tuesday, December 6, 2016

Bill would bar HHS from using Judgment Fund for ‘illegal bailouts’

By Kayla R. Bryant, J.D.

A group of Republican senators are taking a preemptive shot at the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), even before the new administration takes over with its promise to repeal and replace the health law. The HHS Slush Fund Elimination Act (S. 3481) will, according to Senator Ben Sasse (R-Neb), prevent "illegal bailouts" of insurers through judgments and settlements related to the ACA’s risk corridor program. Senators Marco Rubio (R-Fla), John Barrasso (R-Wyo) and Mike Lee (R-Utah) agree that the bill will protect taxpayer funds and prevent "fiscal hijinks."

Risk corridor program. The risk corridor program, created by section 1342 of the ACA, allows insurance companies to receive compensation for the higher costs incurred through insuring a group of sicker consumers than expected. For 2014, if actual claims were at least 3 percent greater than projected when rates were established, the government was to reimburse for half of the additional costs. If the difference jumped to 8 percent, the government covered 80 percent.

New bill. The new bill would prevent HHS from taking money from the Judgment Fund, established to pay judgments and settlements of suits against the government, to cover payments to insurers. Under 31 U.S.C. §1304, the fund may only be used when payment is not otherwise provided for. The Treasury Department explains that the availability of agency funds to cover judgments and settlements renders the Judgment Fund unavailable.

The bill references an HHS memo stating the agency’s willingness to resolve civil actions filed over the risk corridor program, and supports its assertion that HHS should be barred from paying these settlements by citing (1) a 1998 Office of Legal Counsel opinion stating that the Judgment Fund may not be used because an agency does not have sufficient funds to cover judgment; and (2) the Congressional Research Service’s conclusion that the fund does not appear to be available to pay such judgments.

Legislation: FederalLegislation AgencyNews GeneralNews InsurerNews

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