— Rubio, speech in Muscatine, Iowa, Dec. 17, 2015
This is a story about a media narrative, abetted by a presidential campaign, that has unfairly misdirected the credit for one of the most important blows against the Affordable Care Act.
Indeed, the second part of the voiceover in the Super PAC ad comes directly from a New York Times article that, in its first sentence, said that Rubio had “slipped into a giant spending bill” in 2014 a “little-noticed health care provision” that had undermined confidence in Obamacare. The ad quotes other news reports as well.
Meanwhile, Rubio also has claimed that he inserted key language in the budget bill.
In reality, in the sausage making of the law, Rubio didn’t make the sausage that has wounded the law. He had wanted to make a different sausage. But through deft marketing, he managed to slap his name on this one.
So far, with the exception of a careful report in the Associated Press, much of the media have gotten this story wrong.
At issue is something called “risk corridors” — a provision of the massive law that was intended to protect insurance companies from losses if they did not properly estimate premiums in the initial three years of the law. Companies that estimated correctly — and had what were deemed as excess profits — would pay fees to help underwrite at least some of the cost of helping the insurance companies that had stumbled.
While some health-care experts say risk corridors are an important feature to smooth out the transition to the new law, Republicans opposed such payments as a bailout for poorly run insurance companies — or ones that deliberately underpriced their products, knowing they would get government funds. Rubio in 2013 introduced a bill to eliminate the provision, but like other Obamacare repeal efforts, his proposal went nowhere.
It’s worth noting that Rubio does not sit on any committees involved with health-care policy. And it is in the committees that the real business of legislation often is done.
On Feb. 5, 2014, the House Committee on Oversight and Government Reform held a hearing on the “insurance company bailout.” Rubio testified on behalf of the bill he had filed. In a blow to GOP efforts, the Congressional Budget Office released an estimate the day before the hearing that the risk corridor provision would earn $8 billion for the U.S. government.
But a House probe that year actually suggested claims would exceed payments. Meanwhile, Sen. Jeff Sessions (R-Ala.), then ranking member of the Budget Committee, and Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee, came up with a new strategy of attacking the legality of the payments. They also enlisted the help of then-Rep. Jack Kingston (R-Ga.), who chaired the appropriations panel that funds the Department of Health and Human Services and the Labor Department.
The lawmakers questioned whether the payments were actually appropriated correctly — forcing the administration to make changes that ultimately allowed the lawmakers to checkmate the administration. In effect, the Centers for Medicare and Medicaid Services (CMS) was forced to admit that the ACA did not automatically appropriate the funds, but it was subject to discretion of Congress. (A Government Accountability Office opinion requested by Sessions and Upton backed up much of the GOP contention.)
So the administration, which had asserted that the risk-corridor funds came from mandatory spending, designated the money as discretionary. Officials made a number of other changes, such as classifying the payments as “user fees,” in an effort retain the authority to spend the money. But if collections fell short, as Republicans expected, then the administration would need approval for the money from Congress.
“Successfully arguing that the ACA did not appropriate money for the risk-corridor program is what ultimately restricted payments to insurers,” said Paul Winfree, at the time a Sessions staff aide.
The stage was set for Kingston to slip in a sentence — Section 227 — in the massive spending bill that said that no funds in the spending bill could be used for risk-corridor payments. This blocked the administration from obtaining the necessary funds from other programs.
Kingston says the conference negotiation consisted of basically him and his Senate counterpart, then-Sen. Tom Harkin (D-Iowa). “I think it was not seen as a big issue,” Kingston said. “He had won on so many things,” particularly on labor issues. So Kingston offered up a health-care request. “Part of these negotiations is you don’t get everything you wanted.”
Indeed, lawmakers and staff members say, stealth was essential for success, which is why they kept quiet about their achievement. Sessions, Upton and Kingston did not issue news releases — but Rubio did, saying the provision was “a step in the right direction.”
Kingston’s maneuver ultimately left a $2.5 billion shortfall in the risk-corridor program in 2015, as the administration only collected $362 million in user fees — and insurers who misjudged the market sought nearly $2.9 billion in payments. Nearly a dozen nonprofit insurance cooperatives have failed as a result.
In arguing that Rubio had a key role, his supporters have pointed to an Oct. 2014 letter that Rubio and other GOP senators sent to then-House Speaker John A. Boehner (R-Ohio) — it also was signed by Sessions and Rubio’s presidential rival, Sen. Ted Cruz of Texas — urging that risk-corridor payments be limited in the spending bill. But it appears to have been mostly a public-relations exercise. “I didn’t see it, and it didn’t influence me,” Kingston said.
Sessions, in a statement, pointedly did not mention Rubio in explaining what happened:
“The Senate Budget Committee Republican Staff, along with Chairman Upton and his determined staff, exposed a fatal flaw in the risk corridors and then together developed and implemented a months-long multi-step strategy for stopping HHS from executing an illegal bailout. In particular, Mr. Winfree — a key member of my Budget Committee staff at the time — deserves credit for his crucial role in uncovering this fatal flaw and then implementing with my staff and a sophisticated plan for blocking the bailout, working with the office of Congressman Kingston. The essential feature of our joint approach was that it did not require the passage of a standalone bill, but — through establishing that the Risk Corridor lacked an appropriation — laying the groundwork for successfully blocking the illicit transfer of funds in the budget bill.”
Alex Conant, a Rubio campaign spokesman, said Rubio deserves credit because he “was the first one to raise this as an issue. He introduced legislation on it. He wrote letters on it. And ultimately, working with members and staff on the conference committee, we got it done.”
Jeff Sadosky, a spokesman for Conservative Solutions, pointed to the news coverage hailing Rubio and said: “Going as far back as 2013, when Rubio introduced legislation addressing the issue, there’s been only one candidate for president fighting the taxpayer-funded bailout of the insurance industry and showing the GOP the path to defeating ObamaCare.”
“I think it’s fair to say that Rubio raised the profile of the risk-corridor issue,” Winfree said. “However, raising the profile of the risk corridors didn’t restrict CMS’s ability to pay claims. Just like Paul Revere did not defeat Cornwallis at Yorktown.”
The Pinocchio Test
Success always has many fathers, but Rubio goes way too far in claiming credit here. He raised initial concerns about the risk-corridor provision, but the winning legislative strategy was executed by other lawmakers. He certainly had a more central role in the immigration bill from which he has distanced himself — which may be a reason he is trying to elevate his role in this case.
We wavered between Three and Four Pinocchios, but Rubio’s claim that he was responsible for inserting the provision tipped us to Four. He needs to adjust his rhetoric to acknowledge that the key plays were made by other Republicans — and the news media should not so credulously accept his claim.
[Update, Jan. 14: The New York Times corrected the article and rewrote portions of it. “Other Republicans were ultimately responsible," the newspaper acknowledged.]
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