The money the government is supposed to be spending on Obamacare is coming from money we’re saving by not making the payments.
It violates a spending law, but Director Keith Hall with the Congressional Budget Office thinks their scheme is legal, sort of. They aren’t going out of their way to actually tell anyone what they did though. CBO Accountants buried the tricky rule change deep in legalese jargon and are hoping nobody will notice.
After the smoke and mirrors magic show, brought to you by Paul Ryan and top House leaders on Capitol Hill, the money gets re-directed right back to where it is supposed to go and everything is back the same as it was before. Or so it seems. If you blink, you miss the misdirecting sleight of hand that turns into an Obamacare bailout.
Every magic trick starts with an offer. The magician holds something out… a card, a bird…
Deep in the mountain of Obamacare regulations, stealthily passed in the dead of night over the Christmas holiday, was a provision to defray the costs of care to insurers, cost-sharing reductions (CSR’s).
The only problem is that Congress never approved the money to make the payments, as required by the Constitution.
Then the magician takes it away… President Trump canceled the payments. Poof, they vanished.
However, the true art of any magic trick, the part magicians call “the prestige,” requires something special. Making something disappear is easy, in order to call it magic, you have to bring it back.
The costs of patient care are not going to go away and the insurers still have to pay them. They just pass the added burden to consumers through increased premiums. The higher premiums are now priced out of reach of the consumers they are meant to benefit.
Congress, in their infinite wisdom, increased “premium subsidies” which are credits to the consumer. These subsidies pick up the gap and then some.
The Congressional budget office estimates that with the increased subsidies, Obamacare will cost more overall than it did with the cost sharing payments to the insurers.
In case you blinked, that means that invisible extra money is floating around somewhere. The increase in subsidies should match the money that would have been paid using the CSR’s.
Now for the Prestige. Ryan and his cronies in Congress can formally appropriate the money to fund the CSR’s as mandated by Obamacare. By resuming the payments interrupted by President Trump, the Obamacare spending baseline can be lowered back down.
Government economists call that a “savings.”
Ryan wants to use the so called savings to put the money back into the pockets of insurers, the same as the CSR’s are meant to. All they have to do is call it “Reinsurance” and voilà the CSR money is back. Bigger and better than ever before. Instant bail out.
The only problem is that the scheme is illegal all the way around.
The Gramm-Rudman-Hollings Act was created at a time when an out of control deficit threatened to bankrupt the nation within a few short years.
The act requires that when the government has a must-fund mandated “entitlement” then funding must be “adequate to make all payments required by those laws.”
Obamacare created an entitlement. The Health and Human Services Department is required to make CSR payments to insurers. They have to be included in the “budget baseline.”
The law makes it clear there is no choice or discretion at all. The budget must show the CSR payments going out and they must be funded.
The same provision means that assuming higher costs, due to not receiving the payments, is just as illegal. There is no “higher spending” because there is no legal “no-CSR scenario.”
As recently as January, the CBO acknowledged that legally, CSR payments had to be included in the baseline. Rep. Dave Brat (R-VA) learned of the pending bait and switch, so cornered Director Keith Hall to ask him about it.
Hall gave full reassurance that “unless we get direction to do something different, We’re assuming essentially that the money will be found somewhere, because it’s an entitlement.”
He told another lawmaker at the hearing “We’ve treated the cost-sharing reductions actually as an entitlement, at least so far until we get other direction from the Budget Committee.”
Just this week, the budget outlook was released. Sure enough, buried on page 103, in the section marked “Technical Changes in Outlays” was a paragraph of golden “gobbledygook.”
“Technical revisions caused estimates of spending for subsidies for coverage purchased through the marketplaces established under the ACA and related spending to be $44 billion higher, on net, over the 2018–2027 period than in CBO’s June baseline. A significant factor contributing to the increase is that the current baseline projections reflect that the entitlement for subsidies for cost-sharing reductions (CSRs) is being funded through higher premiums and larger premium tax credit subsidies rather than through a direct appropriation.”
No “directive” from the budget committee is mentioned, likely because there never was one.
The government wants you to think their “semantic” argument is legal. They want you to think that “funding” CSR’s through increased premiums is the same as funding them directly.
This trick fails to consider that there should be no increased premiums under the law. Meanwhile, the $44 trillion dollars magically appeared out of nowhere.
Hall will be performing his magic trick in front of both the House and Senate Budget Committees this week. There, he will be forced to justify unilaterally changing the budget baseline. We will see what other rabbits he manages to pull out of his hat.