Washington, D.C. – Cause of Action Institute (“CoA Institute”) filed a lawsuit in the U.S. District Court for the District of Columbia after the Department of Health and Human Services (“HHS”) failed to disclose records about the potential misuse of taxpayer information to market the Affordable Care Act (“ACA”), as well as records on the funding of two controversial ACA programs.
The lawsuit follows three Freedom of Information Act (“FOIA”) requests to HHS and its subsidiary agency, the Centers for Medicare and Medicaid Services (“CMS”), seeking records relating to obligations under the transitional reinsurance program and the risk corridors program, as well as attempts to market ObamaCare to individuals who declined coverage by using information obtained from individual federal tax returns. The agencies failed to produce any responsive records well past the applicable FOIA time limits.
Cause of Action Institute President and CEO John Vecchione: “It appears that senior Obama administration officials acted against taxpayers’ interests and disregarded the law to make ObamaCare appear more successful. Under the law, Americans’ tax information may be used to determine eligibility for subsidies, but not to market ObamaCare to individuals who have already declined to enroll. Disclosures of taxpayer information by the IRS raises serious privacy concerns. As Congress continues its efforts to repeal and replace the ACA, it’s more important than ever for HHS to be transparent and forthcoming about ObamaCare’s failures and missteps in implementation.”
Taxpayer Information: To boost enrollment in ACA programs, it appears the Obama administration attempted to market the ACA to individuals who declined coverage by using information obtained from individual tax returns. A fact sheet released by CMS highlights its plan to “conduct outreach to individuals and families who paid the fee for being uninsured, or claimed an exemption from that fee, for 2015.” Under the ACA, however, tax information may only be used to determine ACA subsidy eligibility; it may not be used to market the ACA to individuals who have already declined to enroll. Taxpayer information disclosures by the IRS to an unknown number of individuals at CMS and throughout the government raises serious legal and privacy concerns.
Risk Corridors: Since its enactment, the ACA has faced considerable funding issues. The risk corridors program was supposed to collect payments from insurers with lower than expected losses and redirect the money to subsidize insurers with higher than expected losses. Because of low enrollment and monetary shortfalls, a CMS memorandum announced that funding for the risk corridors program would not be available to insurers in 2015. The memorandum, however, appears to invite insurers to sue CMS and then settle with the Department of Justice (“DOJ”) to obtain funding, which would constitute an end-run of a provision enacted by Congress in 2014 to prevent shifting funds into the risk corridors program and a violation of DOJ guidance regarding “backdoor bailouts.” Obtaining risk corridor funding through the DOJ Judgment Fund would be an illegal misuse of appropriated taxpayer money.
Reinsurance Program: Section 1341 of the ACA requires the HHS to return payments to taxpayers under the transitional reinsurance program. Under this program HHS collects reinsurance contributions from health insurance providers and third party administrators on behalf of group health plans. In 2014, HHS was supposed to collect $10 billion in payments to health insurers who enroll high-risk individuals and an additional $2 billion in contributions to be deposited directly to the U.S. Treasury. Unfortunately for taxpayers, it appears when HHS collected less money than required by the ACA, the agency violated the law by allocating all funding to health insurers, depriving taxpayers of billions of dollars.
The full complaint can be found here
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