Uncovered: New $2 billion bailout in Obamacare

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By: Byron York 03/31/11 11:02 PM 
Chief Political Correspondent Follow Him @ByronYork

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Investigators for the House Energy and Commerce Committee have discovered that a little-known provision in the national health care law has allowed the federal government to pay nearly $2 billion to unions, state public employee systems, and big corporations to subsidize health coverage costs for early retirees.  At the current rate of payment, the $5 billion appropriated for the program could be exhausted well before it is set to expire.

The discovery came on the eve of an oversight hearing focused on the workings of an obscure agency known as CCIO -- the Center for Consumer Information and Insurance Oversight.  CCIO, which is part of the Department of Health and Human Services, oversees the implementation of Section 1102 of the Affordable Care Act, which created something called the Early Retiree Reinsurance Program.  The legislation called for the program to spend a total of $5 billion, beginning in June 2010 -- shortly after Obamacare was passed -- and ending on January 1, 2014, as the system of national health care exchanges was scheduled to go into effect.

The idea was to subsidize unions, states, and companies that had made commitments to provide health insurance for workers who retired early --  between the ages of 55 and 64, before they were eligible for Medicare. According to a new report prepared by the Department of Health and Human Services, "People in the early retiree age group…often face difficulties obtaining insurance in the individual market because of age or chronic conditions that make coverage unaffordable or inaccessible."  As a result, fewer and fewer organizations have been offering coverage to early retirees; the Early Retiree Reinsurance Program was designed to subsidize such coverage until the creation of Obamacare's health-care exchanges.

The program began making payouts on June 1, 2010.  Between that date and the end of 2010, it paid out about $535 million dollars.  But according to the new report, the rate of spending has since increased dramatically, to about $1.3 billion just for the first two and a half months of this year. At that rate, it could burn through the entire $5 billion appropriation as early as 2012.

Where is the money going?  According to the new report, the biggest single recipient of an early-retiree bailout is the United Auto Workers, which has so far received $206,798,086.  Other big recipients include AT&T, which received $140,022,949, and Verizon, which received $91,702,538.  General Electric, in the news recently for not paying any U.S. taxes last year, received $36,607,818.  General Motors, recipient of a massive government bailout, received $19,002,669.

The program also paid large sums of money to state governments.  The Public Employees Retirement System of Ohio received $70,557,764; the Teacher Retirement System of Texas received $68,074,118; the California Public Employees Retirement System, or CalPERS, received $57,834,267; the Georgia Department of Community Health received $57,936,127; and the state of New York received $47,869,044.  Other states received lesser but still substantial sums.

But payments to individual states were dwarfed by the payout to the auto workers union, which received more than the states of New York, California, and Texas combined.  Other unions also received government funds, including the United Food and Commercial Workers, the United Mine Workers, and the Teamsters.

Republican investigators count the early-retiree program among those that would never have become law had Democrats allowed more scrutiny of Obamacare at the time it was pushed through the House and Senate.  Since then, Republicans have kept an eye on the program but were not able to pry any information out of the administration until after the GOP won control of the House last November.  Now, finally, they are learning what's going on.