The General Accounting Office has issued a report which finds that The Obama administration has illegally failed to make payments to the U.S. Treasury and, instead, has been paying funds collected under Obamacare’s reinsurance program and paying those funds to insurers.
Linky, here:
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This report comes on the heels of a pending lawsuit against the administration from House Republicans alleging that the Obama administration has illegally spent money on a component of Obamacare.
The reinsurance program is a transitional program designed to stabilize premiums by reducing the incentive for insurance companies to charge higher premiums to offset the cost of sick people enrolling in those programs before a sufficient critical mass of healthy people enroll and offset those costs.
While the GAO has no enforcement powers, this is not a good development, given the pending court case. The ACA only works if insurers will support it. How many insurers will continue to support it if it becomes even less cost effective remains to be seen, as will how the White House reacts, if at all, to this report.