Obamacare Could Live or Die by Two Pending Lawsuits

Published November 17, 2016

Saving the Affordable Care Act (ACA) could hinge on the developments of two pending lawsuits against the federal government–one to force a health insurer bailout, and one to stop payments to health insurers–unless President-elect Donald Trump intervenes once inaugurated.

Health insurers suing the U.S. Department of Health and Human Services for $2.5 billion lost to ACA’s risk corridor program could get full relief from HHS via the virtually bottomless “Judgment Fund,” which the Department of Justice uses to settle claims against the federal government. The $2.5 billion is the difference between what profitable insurers paid into the risk corridor program in 2014–$362 million–and what unprofitable insurers were hoping the program would pay out–almost $2.9 billion.

Andy Slavitt, acting administrator at the Center for Medicare and Medicaid Services (CMS), invited insurers to suckle at the Judgment Fund teat by stating in a September 9 memo, “HHS will record risk-corridors payments due as an obligation of the United States Government for which full payment is required,” and “we are open to discussing resolution of those claims … at any time.”

In addition to circumventing Congress, which forbade CMS dip into outside funds to make risk corridor payments, the Judgment Fund bailout scheme is a brazen attempt to shore up President Barack Obama’s floundering legacy at the public’s expense, by keeping insurers invested in ACA.

A Judgment Fund bailout of insurers could keep parts of Obamacare on life support until Democrats can regain Congress and the White House and assert even more control than Obama over Americans’ health care decisions. As I wrote at National Review this week with my colleague Justin Haskins, an executive editor at The Heartland Institute,

If HHS is able to keep insurers in the executive branch’s corner long enough with the Judgment Fund as bait, any ACA remnants Trump keeps will sputter along until a Democrat-controlled Congress and president can scapegoat Obama’s and Trump’s laws, replacing them with the trappings of a single-payer system. To be sure, it’s a long shot for Obama given the Democrats’ slim chances of retaking the Senate next cycle, but it is likely the last shot he has left.

An attempt by the Obama administration to accelerate settlements before Trump is inaugurated on January 20, 2017 should surprise no one. With former Secretary of State Hillary Clinton permanently out of the presidential race, Obama has even greater cause to embed shards of his fragmenting policies as deeply as possible into an executive branch soon to be controlled by Trump, whose presidency Obama said would “reverse every single thing that we’ve done.”

Trump should kill the CMS Judgment Fund bailout scheme immediately upon taking office. If a settlement has already been reached by then, he should halt payments on grounds HHS’s self-imposed “obligations” contradict Congress’s prohibition against supplementing the risk corridor program.

Trump also should drop the federal government’s appeal of a May 2016 court ruling, in favor of the U.S. House of Representatives, that HHS is illegally paying health insurers cost-sharing subsidies. These payments violate the U.S. Constitution by disbursing funds for which Congress has made no appropriation, Federal District Judge Rosemary Collyer ruled. As Chris Jacobs, found and CEO at Juniper Research Group, writes at The Federalist,

These subsidies–separate and distinct from the law’s premium subsidies–reimburse insurers for discounted deductibles and co-payments they provide to some low-income beneficiaries. … Trump should immediately 1) revoke the Obama administration’s appeal of Collyer’s ruling in the House’s lawsuit, House v. Burwell, and 2) stop providing cost-sharing subsidies to insurers unless and until Congress grants an explicit appropriation for same.

Here, again, Trump can and should halt unlawful payments to insurers, who are exiting the Obamacare exchanges in record numbers, deeming them a bad investment despite the subsidies they receive from the Obama administration.

Three months from now Trump will hold power to stop the Obama administration’s aggressive attempts to make unconstitutional payments to health insurers–by blocking a backdoor insurer bailout with the Judgment Fund, and by dropping the government’s appeal of Collyer’s ruling.

More than any campaign promise or populist groundswell, Trump’s oath of office to “preserve, protect and defend the Constitution of the United States,” requires him to do so.

— Michael T. Hamilton ([email protected]) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.



Republican Gov. Dennis Daugaard said Tuesday that he won’t pursue an expansion of Medicaid in 2017 after a discussion with Vice President-elect Mike Pence.

The South Dakota governor said in a statement that his decision is based on a Monday meeting in which he and Pence talked about the Trump administration’s plans for repealing or overhauling the Affordable Care Act.

The move comes after Daugaard’s administration had worked during Democrat Barack Obama’s presidency to open the program to roughly 50,000 more low-income South Dakota residents. …

SOURCE: James Nord, Associated Press


Last Friday afternoon, Donald Trump caused a minor uproar in Washington when he signaled a major softening in his stance towards President Obama’s unpopular health-care law. “Either Obamacare will be amended, or it will be repealed and replaced,” Trump told the Wall Street Journal–a major caveat heretofore unexpressed on the campaign trail.

Why might Trump–who not one month ago, in a nationally televised debate, called Obamacare a “total disaster” that next year will “implode by itself”–embark on such a volte face about the law? Politico notes one possible answer lies in the story of Oscar, a startup insurer created to sell plans under Obamacare:

“Oscar is about to have an unusually close tie to the White House: Company co-founder Josh Kushner’s brother Jared is posted to [play] an influential role in shaping his father-in-law Donald Trump’s presidency. The two brothers in 2013 were also deemed ‘the ultimate controlling persons in Oscar’s holding company system,’ according to a state report.”

In other words, the individual who multiple sources report personally influenced the selection of the next White House chief of staff also holds a controlling interest in a health insurance company whose primary business is selling Obamacare policies. Might that be why Trump has suddenly changed his tune on Obamacare repeal?

In 2000, while contemplating a run for the White House, Trump told Fortune magazine: “It’s very possible that I could be the first presidential candidate to run and make money on it.” That previously expressed sentiment–of using political office for personal pecuniary gain–would not rule out Trump assuming policy positions designed to enrich himself and his associates.

That need might be particularly acute in the case of Oscar, of which Jared Kushner was a controlling person, and in which Josh Kushner’s venture capital firm Thrive Capital has invested. On Tuesday, the insurer reported $45 million in losses in just three states, bringing Oscar’s losses in those three states to a total of $128 million this calendar year. …

SOURCE: Chris Jacobs, The Federalist


About one-third of adults in the U.S., or 33 percent, went without recommended health care due to expensive costs, according to a Commonwealth Fund survey.

The survey was conducted in 11 countries including the United States, Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom. From March to June 2016, the group asked 26,863 adults who were 18 years and older about various aspects of their health care coverage.

The survey found adults in the United States were far more likely than adults in other countries to go without recommended care such as foregoing doctor visits when sick and failing to fill prescriptions because of costs. …

For those who are chronically ill in the United States, 14 percent believed they did not have the support they needed from their health care provider to manage their situation.

The survey also found that adults in the United States found it difficult to see a doctor quickly. More than one-third of low-income adults, or 35 percent, waited six days or more to see a doctor and 17 percent of higher-income adults said the same. …

SOURCE: Ali Meyer, The Washington Free Beacon


In order to reduce ever rising healthcare costs, health insurance companies will need to improve price transparency among their health plans as well as within their provider networks. The Robert Wood Johnson Foundation released a report showing how price transparency can actually play a role in better managing rising healthcare costs.

Price transparency could have a major impact on informing consumers about their medical costs and create a better system for reducing healthcare spending among payers and providers.

Additionally, more consumers are looking for greater price transparency in order to choose the best and most affordable services for their needs. Health payers need to provide transparency for their members in order to lower costs and improve patient satisfaction.

The Robert Wood Johnson report cited that 69 percent of polled consumers are looking for their health insurance companies to provide data on how much they pay doctors and hospitals for medical services. Out of those who have previously compared prices among needed healthcare services, 82 percent stated that they would do so again. This shows how price transparency can benefit both payers and consumers. …

SOURCE: Vera Gruessner, HealthPayerIntelligence


Gov. John Hickenlooper acknowledged Monday that he is considering pushing a proposal to create certificates of need for hospitals, a potentially seismic regulatory change that would slow the recent growth of suburban hospitals and stand-alone emergency rooms in an attempt to slow the rising costs of health care as well.

Hickenlooper first broached the subject while presenting his proposed $28.5 billion budget to the Joint Budget Committee.

The Democratic governor’s request includes a $109 million reduction in transportation funding for this fiscal year and the next fiscal year, as well as a $195 million cut to revenue that otherwise could be raised through the hospital provider fee, both made to stay below the state’s revenue cap and to avoid have to give tax refunds under the Taxpayer’s Bill of Rights. …

“Should we have as many hospitals as we have?” Hickenlooper wondered aloud to the JBC, the six-member committee that draws up the state budget. “Should we continue to open hospitals willy-nilly, or should there be more systemic control of expansion?”

Asked after the meeting whether he was referring to a plan to implement a certificate of need, Hickenlooper said he wasn’t ready to back such a proposal yet.

But he does think it needs to be considered as one avenue to try to slow the steady increase in hospital costs that have helped to take national health-care spending levels to the point where they make up more than one-sixth of America’s gross domestic product — even while he acknowledged that hospital leaders are likely to be very concerned at his suggestion. …

SOURCE: Ed Sealover, Denver Business Journal