Program Diverting Money From Treasury to Insurance Companies

Sen. Ben Sasse (R., Neb.) is taking aim at an Obamacare program that is diverting billions of dollars in payments away from the U.S. Treasury and steering the money to major insurance companies involved with the health care law.

Sasse recently introduced legislation tackling the Transitional Reinsurance Program, one of three programs in Obamacare put into place to protect insurance companies from risks that could arise from entering the marketplace.

Under the reinsurance program, if an individual were to have an Obamacare-compliant plan and accrued medical costs between $45,000 and $250,000, HHS was slated to pay 80 percent of the large claims total back to the insurance companies.

However, HHS later announced that they were going to raise the payment rates for the insurance companies to 100 percent.

The secretary of HHS, under the law, is required to deposit a total of $5 billion between 2014 and 2016 to the Treasury. This amount was supposed to consist of a $2 billion payment in 2014, a $2 billion payment for 2015, and a $1 billion payment for 2016.

Treasury did not receive a single payment out of the $2 billion that they were supposed to receive in 2014, while the insurance companies were given the full $8 billion that they requested. Additionally, HHS carried over $1.7 billion to have on hand to give to insurance companies at a later time.

HHS said it would give Treasury $500 million out of the $2 billion owed for 2015 and that the insurance companies will receive a payout of $7.7 billion. This includes a $6 billion payment for 2015 and the $1.7 billion that was carried over from 2014.

On Feb. 29, 2016, Sen. Sasse wrote to HHS demanding that the full amount “be deposited into the general fund of the U.S. Treasury before any additional amounts are paid to the insurance companies.

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