According to the Small Business Act of 1958, “a small-business concern … shall be deemed to be one that is … independently owned and operated and which is not dominant in its field of operation.”  Under the Code of Federal Regulations, Title 13, Chapter 1, Section 121.105, “a business concern eligible for assistance from SBA as a small business is a business entity organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.” 

Under these definitions, or any other legal or rational interpretation of a “small business,” it would essentially be impossible for a government entity to qualify as a small business.  Yet, on October 2, 2013, the Office of Personnel Management (OPM) deemed that Congress is a small business through a federal regulation.  The purpose of this rather arbitrary and capricious action was to enable members of Congress, their staff, and families to gain access to taxpayer-funded subsidies for health insurance under the Affordable Care Act (ACA), better known as ObamaCare.  This special exemption was cooked up by members of Congress, with help from the White House, to get something that no other individual or business can obtain.

In February, 2014, during ObamaCare’s first open enrollment period, someone acting on behalf of the entire U.S. Senate took advantage of the OPM regulation to file an application to the Washington, D.C. Small Business Health Options Program (SHOP) Exchange.  (Similar applications were filed on behalf of the House of Representatives and their employees.)  The application were eventually obtained by Judicial Watch under the Freedom of Information Act or FOIA.

The Senate application shows that the individual testified that he or she employs 50 or fewer full-time equivalent employees, that the employer is a state/local government, the address is the same as the Senate Disbursing Office, and that the employees’ first and last names were “Twenty” and “Congress” respectively.  However, all other information is redacted, such as who filled out the application and attested that the information provided to the D.C. SHOP is true.

Under the ACA, a SHOP Exchange is where small businesses with 50 employees or less can shop for health insurance.  The employers can control the coverage they provide and how much they will contribute to their employees’ premiums.  But with more than 12,000 congressional employees and dependents, Congress ipso facto is not a small business.  In addition, individual offices do not directly pay any salaries or expenses; checks and payments only come from the House of Representatives or the Senate. 

However, by pushing for OPM to issue the regulation that ostensibly allows them to “be a small business” and participate in the D.C. SHOP, members of Congress and their staff have found a clever, but potentially illegal way to get access to government financial assistance to help pay for their health insurance premiums.

Members of Congress have tried to keep this special carve-out for themselves quiet.  After all, they are supposed to participate in ObamaCare like any other citizen who purchases their health insurance in the individual market.  They even have been able to convince several compliant “fact checkers” that they are fully participating in the ACA.  But if they were following ACA’s rules and everything was above board, allegedly fabricated applications would not be necessary.

Sen. David Vitter (R-La.) has taken on the mission of exposing and stopping what many view as a fraud on taxpayers, and has garnered the wrath of his colleagues in trying to expose their scheme.  As chairman of the Senate Small Businesses and Entrepreneurship Committee, he called for a vote to subpoena the un-redacted applications from the D.C. SHOP Exchange.  However, members of the committee denied his request in a 14-5 vote.  Nonetheless, Sen. Vitter says he will continue to investigate and fight Congress’s special exemption.

Meanwhile, on June 25, 2015, the Council for Citizens Against Government Waste (CCAGW) and nine other organizations and individuals filed a complaint with the Senate Select Committee on Ethics requesting an investigation into whether senators and/or staff members may have committed fraud and broken several laws when they submitted applications to the D.C. Health Insurance Marketplace.

Background

Senators and Representative may argue they participate fully in ObamaCare and get no special exemption from the law.  But more than likely, their office has taken advantage of OPM’s concocted regulation to participate in the D.C. SHOP Exchange.   

Prior to the implementation of ObamaCare, members of Congress and their staff received health insurance benefits through the Federal Employees Health Benefit Program (FEHBP) administered by OPM.  A generous taxpayer-funded subsidy, amounting to about 70 percent of the premium’s cost, was provided to those that purchased health insurance in FEHBP. 

The Heritage Foundation lays out neatly what happened in 2009, when ObamaCare was being debated and decisions about where members and staff should get their health insurance were being made.  Sens. Chuck Grassley (R-Iowa) and Tom Coburn (R-Okla.) offered amendments to bills that were being considered by the Senate Finance Committee and the Health, Education, Labor, and Pensions (HELP) Committee.  Both amendments would have required members of Congress and their staff to enroll in whatever health insurance plan resulted from their relevant committee’s legislation.  Sen. Grassley’s amendment provided government assistance to help pay for insurance premiums, while Sen. Coburn’s amendment did not have such a provision.  The Finance and HELP Committees accepted the amendments to their respective bills, S. 1796, p. 79 and S. 1679, p. 132.

Then-Senate Majority Leader Harry Reid (D-Nev.) oversaw the merging of the Finance and HELP Committees’ bills into the Patient Protection and Affordable Care Act (ACA), H.R. 3590.  The final bill included a provision that closely resembled Sen. Coburn’s amendment, which required Members of Congress to participate in an ObamaCare Exchange but did not include any funds for premium assistance. 

Sen. Grassley gave his Senate colleagues two opportunities to restore taxpayer-funded subsidies to ObamaCare before final passage of ACA; one was never voted on and the other was rejected.  The Senate and House passed the legislation and it was signed into law on March 23, 2010.  In other words, members of Congress knowingly and deliberately agreed that subsidies should not be provided for themselves and their staff once they had to participate in ObamaCare. 

But as open enrollment approached in 2014 and members of Congress finally found out what was in the ACA, they realized the neither they nor their staff would no receive the same generous taxpayer-funded contributions they had under the FEHBP.  Instead, they would have to buy a plan in an ObamaCare Exchange, and if their household income was more than 400 percent of the federal poverty level (FPL), they would not receive any financial help, just like tens of millions of other Americans who now had to purchase insurance in the individual market.

Based on 400 percent of the FPL, individuals that earn more $47,080 a year or a family of four with household income of more than $97,000 a year would have to pay the full freight of their health insurance premiums.  Since members of Congress and many staffers are at or above these income levels, they began to panic.  Staffers threatened to leave their jobs if the situation was not fixed.

Congress could have passed a law and added back the subsidies they gave up when they decided to participate in ObamaCare but that would call more attention to their special exemption.  Instead members of Congress from both sides of the aisle began to work quietly with the White House to come up with a special carve-out to ObamaCare.

By utilizing OMB’s deceitful regulation and pretending to be a small business, members of Congress, their staff and families are getting access to taxpayer-funded subsidies from their “employer,” the federal government.  Even if Congress could legitimately be considered a business, it certainly would be a large one.  But there would still be a problem:  According to the law, large businesses cannot participate in a SHOP until 2017.

CCAGW’s ethics complaint follows an October 15, 2014, taxpayer lawsuit filed by Judicial Watch on behalf of a Washington, D.C. resident against the District of Columbia Health Benefit Exchange Authority.  The plaintiff is seeking a judgment “declaring that the U.S. Congress’s participation in the District of Columbia’s ‘Small Business Exchange’ is unlawful and an injunction prohibiting Defendants from allowing Congress to participate in the exchange or expending taxpayers dollars on Congress’ participation.”  Judicial Watch’s work helped bring to light the falsified documents that were submitted to the D.C. SHOP Exchange.  In January 2015, the D.C. government conceded the U. S. Congress could not obtain insurance through the SHOP under D.C. law but that OPM had overridden their law, and indirectly the ACA.

CCAGW also signed a letter on June 15 with several other conservative groups that asked House Committee on Oversight and Government Reform Committee Chairman Jason Chaffetz (R-Utah) to subpoena and investigate similar suspicious documents that were submitted by individuals in the House of Representatives in order to illegally obtain taxpayer-funded subsidies.

Too often Congress exempts itself from the laws it creates.  OPM’s dubious regulation shields members of Congress and staff from the sky-high costs of ObamaCare that millions of Americans who purchase health insurance in the individual market experience every month when they pay their premiums.  An investigation into this “small business” is certainly warranted.