Oversight Presses HHS on Billion-Dollar Scheme Designed to Mask Obamacare Cuts

Published: Sep 27, 2012

HHS Claims It Can Spend Unlimited Amount of Money on the Extralegal Project without Congressional Approval

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., and Subcommittee Chairman James Lankford, R-Okla., pressed Secretary of Health and Human Services Kathleen Sebelius for documents related to a “demonstration project” in which she spent $8.3 billion outside of the Department’s lawful authority to temporarily offset Obamacare’s controversial cuts to the Medicare Advantage program. The Government Accountability Office has recommended that the project be canceled.

“This is highly significant as it is the first Medicare demonstration project that GAO has ever recommended cancelling,” Issa and Lankford write. “If the Department continues to ignore the Committee’s request, we will consider the use of compulsory process.”

Under current law, HHS may conduct “demonstration projects” to test the impact of payment changes to Medicare programs. However, the “Medicare Advantage Quality Demonstration Project” spent $8.3 billion- an amount greater than all 85 previous demonstrations combined.  

At a July 25th hearing, Medicare Director Jonathan Blum asserted that HHS can spend an unlimited amount of unappropriated, unauthorized money on a Medicare demonstration project- simply ignoring the rules in place designed to keep demonstration projects budget-neutral.

The $8.3 billion spent through the extralegal project is enough to offset 71% of Obamacare’s cuts to the popular Medicare Advantage program set to take place before the November elections.

“The Committee is concerned that the only plausible explanation is that, realizing the political danger of the law’s large cuts to Medicare Advantage during an election year, you decided to utilize a loophole in the Social Security Act to implement a temporary bandage that would cover up PPACA’s large cuts to the 13 million seniors enrolled in Medicare Advantage,” Issa and Lankford wrote in the August 1st letter.

You can read today’s letter here. You can read the August 1st letter here. You can watch video of the Committee’s July 25th hearing here. For more facts about the extralegal $8.3 billion project, click here.


Related Documents

Name Document
September 27, 2012 Second Letter to Secretary Sebelius on the Medicare Advantage Demonstration Document
August 1, 2012 First Letter to Secretary Sebelius on the Medicare Advantage Demonstration Document
FAQ: The Obama Administration's $8 Billion Extralegal Project Document