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The Obama administration didn't act illegally in disbursing $5 billion in funds to health insurers under an Affordable Care Act program, HHS Secretary Sylvia Mathews Burwell said.

At a March 15 hearing on the HHS budget held by the House Education and the Workforce Committee, Reps. Bradley Byrne (R-Ala.) and Virginia Foxx (R-N.C.) cited a Feb. 23 Congressional Research Service memo that said the funds were supposed to go to the U.S. Treasury for administration costs and that the Obama administration's payments to insurers was “in conflict with the plain text” of the ACA.

Burwell replied that the Department of Health and Human Services believes its interpretation of the law “is accurate and correct,” and she said no one raised any concerns about it in public comments on a notice of rulemaking in which the plan was proposed in 2014.

The reinsurance program, which compensates individual plans for high-cost enrollees, has paid insurers better than the other two ACA premium stabilization programs. Without the extra reinsurance payments, health plans would have taken an even worse beating on the low risk corridor payments that the HHS made to plans. A total of $25 billion, including the $5 billion for the U.S. Treasury contribution, is being collected from both self-insured employer and individual market plans from 2014 through 2016 under the reinsurance program.

Impact on Employers

“I've heard from employers who self-insure that this transitional reinsurance fee is particularly burdensome to them, depriving them of resources that could be used instead to create jobs,” Foxx said. She said the proposed rule Burwell referred to “was drafted in such a complicated way that no one could interpret it in the way that your department did, where you used convoluted language to create a loophole to justify your reasoning.”

In a March 15 blog posting, Timothy Jost, an emeritus professor at the Washington and Lee University School of Law and a supporter of the ACA, said that for 2014, less than $10 billion was collected from employers and health insurance plans for the reinsurance fund. Funds weren't available to repay the Treasury, and the CRS conclusion “could be seen to be at odds with the deference agencies are usually given in statutory interpretation,” Jost said.

Recouping Subsidies

Burwell also was asked by Rep. Lou Barletta (R-Pa.) whether $750 million in subsidies paid to about 500,000 people who didn't verify their eligibility will be recovered. A report issued Feb. 8 by the majority staff of the Senate Homeland Security and Governmental Affairs Committee said the Internal Revenue Service and the Centers for Medicare & Medicaid Services haven't implemented an effective plan to recoup the payments.

“These tax credits are solely intended to be used to purchase health insurance by United States citizens and those lawfully residing here,” Barletta said. “I'd have a hard time explaining to families in my district, many of whom are struggling to put food on the table, as to why they should be helping to pay for the health expenses of someone who broke the law to get here and has no right to those federal dollars,” he said.

Burwell said a total of 1.6 million people were removed from ACA enrollment in the first year of the program because they didn't provide adequate documentation to verify eligibility for subsidies. That number included about 500,000 people who didn't produce documentation to prove their legal status in the U.S.

People who didn't verify their eligibility for subsidies will owe the money in tax payments when they reconcile their tax returns, Burwell said.