Hearing hits Obama Administration over Cost Sharing Reduction funding

The Obama Administration unlawfully funded the Cost Sharing Reduction (CSR) program under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a House Ways and Means Oversight Subcommittee hearing led by subcommittee chairman Peter Roskam (R-Ill). The hearing included witness testimony from agency officials regarding the propriety of the Administration’s spending on a program with disputed appropriations. The hearing was accompanied by the release of report containing the findings of a 17-month oversight investigation into the Administration’s funding of the CSR program.


Ways and Means Committee Chairman Kevin Brady (R-Texas) emphasized what he called an unprecedented level of obstruction by the Obama administration and described the hearing as an important step towards transparency. Representative John Lewis (D-Ga) expressed concern that the hearing was another partisan attempt to “roll back health care reform.” Lewis asserted that because the CSR funding issue was being decided through ongoing litigation in federal court, it was not the place of a congressional committee to litigate the issue. Chairman Brady contested assertions that the hearing was improper as a result of ongoing litigation, noting that the power of the purse is not limited by ongoing litigation between Congress and the Executive branch. Additionally, he noted that the dispute was not about health care but, instead, the separation of powers.


Mary Wakefield, Acting Deputy Secretary of HHS, explained that the CSR program was designed to defray the cost of health coverage for low-income individuals. She explained that it limits out-of-pocket costs for low-income individuals because, in many cases, out-of-pocket costs are the factor that prohibits access to care. She explained that, often, those costs serve as a barrier to care because low-income individuals are forced to choose between two essential expenditures—for example, housing and health care. She testified that 6.4 million people are benefitting from the CSR program as of 2016. Roskam objected to her characterization of the program, noting that the CSR subsidy is a subsidy for insurance companies and not “poor people.” Representative Joe Crowley (D-NY) called Roskam’s characterization unclear, explaining that the CSR program benefits patients “at the point of care.”


Roskam asserted that, by law, the CSR program requires an annual appropriation. However, he said, in the absence of a congressional appropriation, the administration decided to fund the CSR program with a permanent funding appropriation (31 U.S.C. §1324) that was designed to support the ACA’s premium tax credit. John Koskinen, Commissioner of the Internal Revenue Service, acknowledged that under the IRS’ charge to implement the tax provisions of the ACA, the IRS decided to use the Section 1324 appropriation for the CSR program. The agency officials asserted that the funding decision was appropriate, in part, because the CSR program is integrated with the other ACA subsidies like the premium tax credit. In response to requests for further legal justification for the funding source, all of the agency officers referred lawmakers to the briefs of the ongoing litigation between House Republicans and the Obama Administration (see Court sides with House Republicans, finds no appropriation for cost-sharing reductions, Health Reform WK-EDGE, May 18, 2016).


In response to questions regarding obstruction and agency compliance with subpoenas, Mark Mazur, Assistant Secretary for Tax Policy at the Department of Treasury, Michael Deich, Senior Advisor for Budget at the Office of Management and Budget, and Wakefield testified that they have responded to subpoenas and will continue to work with Congress regarding requested documents.