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A Violation of the Antideficiency Act?

Thursday February 26th, 2015   •   Posted by Craig Eyermann at 8:31pm PST   •  

6883422_S Under federal law, no agency or department can spend money on any discretionary purpose without authorization by the Congress of the United States. But apparently, when it comes to spending money to prop up the Affordable Care Act, neither the U.S. Treasury Department nor the Department of Health and Human Services can apparently be bothered to follow the law, subsidizing health insurers to the tune of $3 billion in 2014.

Philip Klein of the Washington Examiner explains more:

At issue are payments to insurers known as cost-sharing subsidies. These payments come about because President Obama’s healthcare law forces insurers to limit out-of-pocket costs for certain low income individuals by capping consumer expenses, such as deductibles and co-payments, in insurance policies. In exchange for capping these charges, insurers are supposed to receive compensation.

What’s tricky is that Congress never authorized any money to make such payments to insurers in its annual appropriations, but the Department of Health and Human Services, with the cooperation of the U.S. Treasury, made them anyway.

The law that the Health and Human Services and Treasury Departments would appear to be violating is called the Antideficiency Act. Here is how the U.S. Government Accountability Office describes the law:

The Antideficiency Act prohibits federal employees from

  • making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31 U.S.C. § 1341(a)(1)(A).
  • involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. 31 U.S.C. § 1341(a)(1)(B).
  • accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property. 31 U.S.C. § 1342.
  • making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations. 31 U.S.C. § 1517(a).

Federal employees who violate the Antideficiency Act are subject to two types of sanctions: administrative and penal. Employees may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both.

The main legal question that needs to be answered in this situation is whether or not the Affordable Care Act allows these corporate welfare payments for health insurers to be made without having the money be appropriated by the U.S. Congress for that express purpose. Klein reports that the Obama administration, as evidenced through its 2014 budget proposal, clearly believes it does:

For fiscal year 2014, the Centers for Medicare and Medicaid Services (the division of Health and Human Services that implements the program), asked Congress for an annual appropriation of $4 billion to finance the cost-sharing payments that year and another $1.4 billion “advance appropriation” for the first quarter of fiscal year 2015, “to permit CMS to reimburse issuers …”

In making the request, CMS was in effect acknowledging that it needed congressional appropriations to make the payments. But when Congress rejected the request, the administration went ahead and made the payments anyway.

What we would seem to have here, then, is a pretty clear cut example of how far Washington, D.C.’s spending has gotten out of control during the Obama administration’s tenure in office.

But it gets worse. After asking the U.S. Treasury Department for an explanation detailing the basis under which they and the HHS made the unauthorized payments, U.S. House of Representatives Ways and Means Committee Chairman Paul Ryan was told to take the matter up with the U.S. Department of Justice:

In response, on Wednesday, the Treasury Department sent a letter to Ryan largely describing the program, without offering a detailed explanation of the decision to make the payments. The letter revealed that $2.997 billion in such payments had been made in 2014, but didn’t elaborate on where the money came from. Over the next decade, cost-sharing payments to insurers are projected by the Congressional Budget Office to cost taxpayers nearly $150 billion.

Instead of detailing the basis for making the payments without appropriations, Treasury officials cited the ongoing House GOP litigation, and referred Ryan to the Department of Justice.

Put a bit differently, the U.S. Treasury Department and Department of Health and Human Services are stonewalling the U.S. Congress and have “lawyered up“.

It’s perhaps an unfortunate coincidence that the “lawyer” defending their interests would also appear to be the U.S. government’s prosecutor, and would therefore have the “prosecutorial discretion” to not enforce the nation’s criminal law.

One wonders if that might change if Americans were to became more familiar with the legal definitions of the words “embezzlement” and “racketeering“. Or would they turn a blind eye to the newest and least legal form of corporate welfare?

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February 2015