The Affordable Care Act is the biggest new health care program in decades, but the Obama administration has ruled that neither the federal insurance exchange nor the federal subsidies paid to insurance companies on behalf of low-income people are “federal health care programs.”
The surprise decision, disclosed last week, exempts subsidized health insurance from a law that bans rebates, kickbacks, bribes and certain other financial arrangements in federal health programs, stripping law enforcement of a powerful tool used to fight fraud in other health care programs, like Medicare.
The main purpose of the anti-kickback law, as described by federal courts in scores of Medicare cases, is to protect patients and taxpayers against the undue influence of money on medical decisions.
Kathleen Sebelius, the secretary of health and human services, disclosed her interpretation of the law in a letter to Representative Jim McDermott, Democrat of Washington, who had asked her views. She did not explain the legal rationale for her decision, which followed a spirited debate within the administration.
Under the Affordable Care Act, millions of people will be able to buy insurance from “qualified health plans” offered on exchanges, or marketplaces, run by the federal government and by some states.
Most of the buyers are expected to be eligible for subsidies to make insurance more affordable. The subsidies, paid directly to insurers from the United States Treasury, start in January and are expected to total more than $1 trillion over 10 years.
Ms. Sebelius said the Health and Human Services Department “does not consider” the subsidies to be federal health care programs. She reached the same conclusion with respect to federal and state exchanges, built with federal money, and with respect to “federally funded consumer assistance programs,” including the counselors, known as navigators, who help people shop for insurance and enroll in coverage through the exchanges.
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