HHS told the GAO that its funding decision was within its discretion under the Affordable Care Act. Watchdog knocks administration for misusing Obamacare funds

The Obama administration is illegally sending payments to health insurers instead of to the federal Treasury as Obamacare requires, according to a new report from the Government Accountability Office.

The congressional auditor's report focuses on how the government handles fees paid by insurers for Obamacare's reinsurance program, which collects money from all health plans to help insurers cover the cost of sicker patients in the health care law's exchanges.


In 2014, the industry-funded reinsurance program was supposed to provide $10 billion to insurers and $2 billion to the federal Treasury. But when total collections from insurers amounted to only $9.7 billion, the Department of Health and Human Services opted to funnel all of the money toward insurers. The agency paid insurers $7.9 billion in claims for 2014, the first year of exchange coverage, and held over the remaining $1.7 billion for future payments.

Republicans, who asked the GAO investigate the issue, hailed the GAO's finding as vindication for their longstanding claims that the Obama administration is wrongly prioritizing insurers over taxpayers.

“This new opinion from the government’s top watchdog confirms that the Obama administration is not above the law,” said Republican members of the House Energy and Commerce Committee in a statement. "The administration needs to put an end to the Great Obamacare Heist immediately.”

HHS told the GAO that its funding decision was within its discretion under the Affordable Care Act. But the GAO ruled otherwise, finding that the statute clearly requires that the Treasury get a share of the funds.

“The fact that HHS’ collection ultimately fell short of the projected amounts does not alter the meaning of the statute,” the ruling concludes.

HHS and the White House did not immediately respond to requests for comment.