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This summer, Americans learned that the Obama administration transferred billions of U.S. taxpayer dollars in the form of cash to Iran in exchange for the release of U.S. hostages and Iran’s acceptance of a deal to delay its development of nuclear weapons for 10 years. Since Iran made the release of the U.S. hostages directly contingent upon its receipt of cash in addition to the secret lifting of United Nations sanctions by the U.S. government, the transfer of the cash to Iran’s government has been described as a ransom payment.
The money for those payments came from a little known fund operated by the U.S. Department of Justice called the Judgment Fund. While the DOJ’s Judgment Fund is intended to pay out legal settlements owed by the U.S. government to plaintiffs who win court cases against the U.S. government, the Obama administration would increasingly appear to view it as a means to do an end run around the U.S. Congress to fund its initiatives without congressional approval.
The latest beneficiaries of the Obama administration’s back door approach to giving away money from U.S. taxpayers to benefit its political interests may be the big insurance companies that are losing millions of dollars from their participation in the Affordable Care Act health insurance exchanges, which represents a fraction of their generally profitable business.
Under current law, any money to cover losses that are not offset by profits collected by other health insurers participating in the ACA’s exchanges through the law’s risk corridor program must come from the U.S. Congress. The risk corridor program was designed by the authors of the Affordable Care Act to be budget neutral, where they expected that health insurers participating on the ACA’s exchanges would have sufficient profits to cover any losses. As written, that portion of the Affordable Care Act also ensures that U.S. taxpayers will not be on the hook to bail out any extensive losses that the health insurers may have unless the U.S. Congress chooses to specifically appropriate money for that purpose.
In 2014, the U.S. Congress also restricted any transfer of other money budgeted to the U.S. Department of Health and Human Services from being used for the purpose of compensating the losses of health insurance companies participating on the Affordable Care Act’s state exchanges.
The Washington Post reports that the Obama administration thinks that the DOJ’s Judgment Fund is its golden ticket to get around such restrictions.
The Obama administration is maneuvering to pay health insurers billions of dollars the government owes under the Affordable Care Act, through a move that could circumvent Congress and help shore up the president’s signature legislative achievement before he leaves office.
Justice Department officials have privately told several health plans suing over the unpaid money that they are eager to negotiate a broad settlement, which could end up offering payments to about 175 health plans selling coverage on ACA marketplaces, according to insurance executives and lawyers familiar with the talks.
The payments most likely would draw from an obscure Treasury Department fund intended to cover federal legal claims, the executives and lawyers said. This approach would get around a recent congressional ban on the use of Health and Human Services money to pay the insurers.
The Washington Post also describes the DOJ’s Judgment Fund, but omits noting its role as the source of funds in President Obama’s Iran nuclear program and hostage release deal.
A settlement probably would rely on Treasury’s Judgment Fund, a 1950s creation that is allowed as much money as it needs to satisfy valid claims against the government. The fund’s website shows that it has been used for a few hundred claims against HHS in the past decade. Taken together, they amounted to about $18 million — a fraction of what the insurers are owed.
The report then goes on to note that the DOJ is looking to make a deal to provide for the bailout of large health insurance companies to cover their losses on the Affordable Care Act state exchanges during the next two weeks, which could cost American taxpayers as much as $2.5 billion.
The Iran nuclear and hostage deal may very well have been the Obama administration’s test case for using the DOJ’s Judgment Fund to secretly evade legal restrictions on how the administration may spend U.S. taxpayer dollars in order to achieve its unapproved political agenda. Having succeeded with its test, the Obama administration would now appear to have bigger plans for the DOJ’s Judgment Fund in its remaining months in office, where it intends to use this method of judicially laundering U.S. taxpayer money to bestow billions more to benefit the administration’s special interests without either explicit Congressional approval or oversight.