Sessions Testifies Before House Oversight Committee On HHS’ Lack Of Legal Authority To Make Obamacare Risk Corridor Payments

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following prepared remarks today in testimony before the House Committee on Oversight and Government Reform:

“Chairman Jordan, Ranking Member Cartwright, and members of the Committee: thank you for inviting me here today to discuss a specific concern that our Budget Committee staff has identified with the risk corridor program in the President’s health law. But the issue is much broader than health care because it impacts the constitutional power of Congress to appropriate money.

As you know, President Obama’s health law created a risk corridor program in an effort to mitigate risk for the private companies that participate in the federally-controlled health insurance market.

The government would collect a portion of the profits if a company makes money and pay off a portion of its losses if a company loses money.

But, under our constitutional system of government, HHS must receive an appropriation from Congress before it can make payments to insurance companies that lose money. It seems quite clear that the health law left any funding of the risk corridor program to a future Congress by not appropriating such money as part of the original health law.

According to our own Congressional Research Service, “under long standing GAO interpretations, an appropriation must consist of both a direction to pay and a specified source of funds.” The law does not meet these requirements. This principle flows from the plain language of Article I, Section 9, Clause 7 of the Constitution, which states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Already this year, CRS has twice issued this statement, accepting the GAO interpretation.

Yet, it appears that HHS intends to make risk corridor payments without congressional appropriation. It has issued regulations and made statements to insurance companies which confirm that fact. Without an explicit appropriation, any money spent on this program would be an illegal transfer of funds. This is bedrock constitutional law.

It has been suggested that the Obamacare risk corridor program is the same as the risk corridor program for Medicare Part D. This is plainly false.

The legislation establishing Medicare Part D included a mandatory appropriation for just that purpose. President Obama’s health law contains no such language.

To carry out their plan, the President’s FY 2015 budget requests the authority to collect and spend money from “authorized user fees.” HHS would also apparently use that authority as justification to redistribute money collected from profitable insurance plans, or to even raid other funds for this purpose.

This would give HHS unchecked discretion over these funds, creating a multi-billion-dollar slush fund.

Our research indicates that if Congress does not either provide a funding source through appropriations or grant the Administration new authority to shift funds around, then any risk corridor payments that HHS makes would be illegal. Should the Administration persist in doing so, it would be subject to prosecution under the Antideficiency Act.

The implementation of the President’s health law has been marked by a series of unilateral actions by the President and executive branch officials that undermine the rule of law and public confidence. This is part of a larger pattern of executive branch lawlessness and unilateralism that has caused great unease throughout the nation. Sadly, the Senate has failed to defend Congress’ constitutional prerogatives. The House, by contrast, is to be applauded for its defense of the Constitution, as exemplified by this hearing today. I would urge lawmakers in both parties to act in defense of Congress—the people’s representatives—and the authorities delegated to it by the Constitution.”


To view an analysis that the Congressional Research Service prepared for the Senate Budget Committee, in which the research agency confirms that HHS does not have the authority to make these risk corridor payments absent additional appropriation from Congress, please click here.