Thursday, May 1, 2014

Insurer Bailout Provision Lacks Required Appropriation Language. Nevertheless, the Admin Will Make the Payments Anyway

This is from University of Michigan Law Professor Nicholas Bagley:
... The trouble is that the risk corridor program lacks any appropriations language. ... [T]he lack of an appropriation could matter a lot for insurers with heftier-than-expected costs. In CRS’s view, HHS cannot pay them the $8 billion they’re set to receive through the program. ...
Should Congress fail to appropriate the needed funds, the administration will come under intense pressure to find a workaround. (Sound familiar?
If it comes to that, my hunch is that the administration will read the ACA to establish a “revolving fund” for the risk corridor program. As explained in the “Red Book”— GAO’s bible of appropriations law—an agency that gets money from an outside source normally has to deposit that money in the federal treasury. Nothing comes out of the treasury without an appropriations statute. An agency with a revolving fund, however, can deposit receipts into the fund and then draw on those receipts as necessary to carry out the fund’s purposes. ... 
The challenge for the administration is the principle, spelled out in the Red Book, that “agencies have no authority to administratively establish revolving funds.” Congress must establish them by statute, and must do so pretty explicitly. As CRS sees it, §1342 of the ACA, which establishes the risk corridor program, doesn’t live up to the Red Book’s demanding standards. ... 
[I]f push comes to shove, could the administration “get to yes” on whether it has the legal authority to make risk corridor payments? I think it probably could.