The Obamacare Funding Farce

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

National Journal

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.