The Obamacare Funding Farce

Sorry, Ted Cruz. Obamacare needs less money from Congress now that insurers are helping to finance it.

National Journal
Sam Baker
March 4, 2014, 4:50 p.m.

Pres­id­ent Obama is ask­ing Con­gress for more money to im­ple­ment Obama­care. Surely he knows Re­pub­lic­ans won’t give it to him. And Re­pub­lic­ans — just as surely — know that Obama­care will be im­ple­men­ted any­way, be­cause the law con­tains ways for the ad­min­is­tra­tion to fund it with or without Con­gress’s help.

And around and around we go in the flat circle that is Obama­care polit­ics.

It’s all a bit of polit­ic­al theat­er, but it has con­sequences on the ground: The phony fight over “de­fund­ing” the Af­ford­able Care Act drove the gov­ern­ment to shut down this fall — even though the vast ma­jor­ity of fund­ing for the law was nev­er at stake.

Tues­day, it began again, when the White House’s newly re­leased budget pro­pos­al re­ques­ted about $630 mil­lion to sup­port fed­er­ally run in­sur­ance ex­changes — the center­piece of the ACA.

The ad­min­is­tra­tion re­ques­ted al­most twice that amount last year, and the pro­pos­al was so thor­oughly dead on ar­rival that Sen­ate Demo­crats didn’t even try to pass the ex­tra fund­ing. They settled for beat­ing back the equally fu­tile ef­fort led by Sen. Ted Cruz to “de­fund” the law. And after the shut­down was over and the his­tri­on­ics were fin­ished, the status quo re­mained largely in­tact.

This year prom­ises to be little dif­fer­ent.

So, the White House won’t get the $630 mil­lion it says it needs. And it could use the money: Be­cause the ACA didn’t provide any dir­ect fund­ing for fed­er­ally run in­sur­ance ex­changes, the Health and Hu­man Ser­vices De­part­ment has had to cobble to­geth­er as much as it could, through a pro­cess that’s ba­sic­ally the fed­er­al gov­ern­ment’s ver­sion of rum­ma­ging through the couch cush­ions for loose change.

But the ad­min­is­tra­tion has con­sist­ently found ways to work around con­gres­sion­al Re­pub­lic­ans. Con­sider the latest re­quest for ad­di­tion­al fund­ing: HHS is ask­ing for $630 mil­lion, after seek­ing $1.5 bil­lion last year. Why the drop?

It’s be­cause the ad­min­is­tra­tion is now col­lect­ing user fees from the in­sur­ance com­pan­ies that sell plans through Obama­care’s ex­changes. Those fees will bring in around $1.2 bil­lion next year, ac­cord­ing to HHS’s budget doc­u­ments.

The de­part­ment ad­ded those rev­en­ues in with its re­quest from Con­gress, cre­at­ing a total fund­ing short­fall that’s ac­tu­ally a little bit big­ger than last year’s. But now in­surers are provid­ing the ad­di­tion­al fund­ing that Con­gress won’t.

And like so much of the law’s fund­ing, it doesn’t re­quire con­gres­sion­al ap­prov­al. Short of re­peal­ing Obama­care, which is just as un­real­ist­ic as fund­ing it, there’s not much Re­pub­lic­ans can do to cut off these rev­en­ues.

This is why the gov­ern­ment shut­down was so di­vis­ive even among Re­pub­lic­ans. Shut­ting down the fed­er­al gov­ern­ment did very little to stop the flow of money to im­ple­ment the ACA, be­cause most of Obama­care’s fund­ing was provided in Obama­care it­self — not through the reg­u­lar ap­pro­pri­ations pro­cess.

HHS has had to get cre­at­ive to find money for the ex­changes. It tapped pots of money from oth­er parts of the law, some­times an­ger­ing Demo­crat­ic al­lies. It drew down a $1 bil­lion fund for gen­er­al im­ple­ment­a­tion work, and also tapped the law’s pre­ven­tion and pub­lic health fund. Re­pub­lic­ans did suc­cess­fully cut that fund by $1 bil­lion in the spend­ing bill that re­opened the gov­ern­ment, pre­vent­ing HHS from us­ing it again to stand up the ex­changes.

Some of the tricks and back doors HHS used to find ex­tra cash are now ex­hausted or close to it, but in­surers’ user fees are pick­ing up most of the dif­fer­ence.

The de­part­ment de­cided in 2012 that in­sur­ance plans would pay a fee of 3.5 per­cent of their premi­ums to help the fed­er­ally run ex­changes func­tion. (States that run their own mar­ket­places can set their own fees, or choose not to charge one.) Rev­en­ue from the fees will go up along with en­roll­ment.

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