Discovered: An UNLIMITED Obamacare Slush Fund

Just when we thought there were no more brazen audacities left to report about in Obamacare, here comes a doozy.   

House Republicans have uncovered, tucked away in Section 1311(a) of the Patient Protection and Affordable Care Act (PPACA), an UNLIMITED Obamacare implementation slush fund.

That’s right.  Unlimited.  

An open tap on the US Treasury, this little gem — discovered by Representative Fred Upton (R-Mich.), chairman of the House Energy & Commerce Committee — can be used for anything the President wants to spend taxpayer money on, under the guise of “actitivites related to establishing” Obamacare health benefit exchanges.

Here’s the relevant legal language from 1311(a):

(1) PLANNING AND ESTABLISHMENT GRANTS.—There shall be appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, an amount necessary to enable the Secretary to make awards, not later than 1 year after enactment of this Act, to States in amounts specified in paragraph (2) for the uses described in paragraph (3).

(2) AMOUNT SPECIFIED.—For each fiscal year, the Secretary shall determine the total amount that the Secretary will make available to each State for grants under this subsection.

(3) USE OF FUNDS.—A State shall use amounts awarded under this subsection for activities (including planning activities) related to establishing an American Health Benefit Exchange, as described in subsection (b).

. . . 

(4)(B).– “No grant shall be awarded under this subsection after January 1, 2015.”

While this language thankfully shuts down the slush fund in 2015, it provides absolutely no limit on how much can be spent before then, and only the vaguest guidance on how it’s spent. It’s so vague, in fact, that any determined socialist could sail an ocean liner through it.  

And he is. 

Under Mr. Obama’s approving eye, Secretary of Health and Human Services (HHS), Kathleen Sebelius, is already busy using this uncapped fund to seduce states into collaborating in the implementation of Obamacare. She’s issued nearly $50 million in grants to help states “plan and evaluate” how they’ll set up exchanges by 2014 as the law requires them to do.

That’s just the appetizer.  Dr. Donald Berwick, the chief administrator of Medicare and Medicaid, has hinted at even more ambitious plans to tap the slush fund to bail out state governments, which are currently groaning under out-of-control Medicaid spending. 

The Congressional Research Service (CRS) has confirmed that the “state-based exchange grants” fund is an “indefinite appropriation,” meaning it’s open-ended and requires no further action by Congress to be tapped by the President. 

If he wants to, Mr. Obama could increase the cost of his health care law by not just billions, but hundreds of billions, of dollars, unilaterally.    

As you might guess, some in Congress are not sitting still for this.  

Next week, the House of Representatives will vote on a bill drafted by Mr. Upton, H.R. 1213, to shut off this particular tap and weld it shut.  

The Congressional Budget Office (CBO) estimates Chairman Upton’s bill would save taxpayers about $14 billion over the next 10 years; but this is only a guess on the agency’s part.  The savings could be much greater, because, as we’ve said, the slush fund is not subject to any controls or meaningful limits. 

Under our Constitution, only Congress has the power of the purse.  To formally delegate to the President the power to appropriate funds from the Treasury without stint or limit breaches the separation of powers in fact, if not in form.  

In short, Section 1311(a) of PPACA is a dangerous, irresponsible, and arguably unconstitutional delegation of money and power to the Executive Branch.

Regardless of one’s opinions about government-run health care, surely all Americans can agree that this slush fund gives the President — any President — too much power. 

The vote is next Tuesday, May 2nd.  To learn more about this bill and related issues, visit our Obamacare Repeal War Room.

Or go straight to our petition page to send an email to your representatives.

[Update: On May 3, 2011, the House passed H.R.1213 by a vote of 283 to 138. It went over to the Senate. Urge your Senators to schedule a vote on the bill.]   

Dean Clancy is Freedomworks’s Legislative Counsel and Vice President, Health Care Policy.