The U.S. Supreme Court will hear a case brought by a group of insurers against the federal government over $12 billion in payments owed after the passage of the 2010 Affordable Care Act, passed under Democratic former President Barack Obama. The money is allegedly owed under a program set up by the government aimed at encouraging insurers to offer medical coverage to previously uninsured Americans. Insurers involved in the case include Moda Health Plan Inc., Blue Cross and Blue Shield of North Carolina, Maine Community Health Options, and Land of Lincoln Mutual Health Insurance Company.
The Affordable Care Act, also widely known as Obamacare, enabled millions of Americans who previously had not medical coverage to obtain insurance. The law designed a risk corridor program to mitigate the risks of selling coverage to previously uninsured people. Under the program, insurers that paid out more in claims than they took in from premiums on policies sold through the Obamacare insurance exchanges were entitled to government compensation for part of their losses. The program covered losses incurred from 2014 to 2016.
In December 2014, Congress passed an appropriations bill for the 2015 fiscal year that included a rider barring the Department of Health and Human Services (HHS) from using general funds to pay the government’s risk corridor obligations. The insurance companies sued, but a divided three-judge panel of the United States Court of Appeals for the Federal Circuit ruled that Congress had suspended the government’s obligation to make such payments. Several insurers, including Humana Inc., Anthem Inc. and Centene Corp., have already written off the value of the payments.
The insurers appealed to the Supreme Court, saying that if allowed to stand, the ruling would let the government pull a “bait-and-switch” to withhold money the companies were promised. In the brief, they wrote: “By giving judicial approval to the government’s egregious disregard for its unambiguous statutory and contractual commitments, the decision provides a road map for the government to promise boldly, renege obscurely, and avoid both financial and political accountability for depriving private parties of billions in reliance interests.” The arguments will be heard in the court’s next term, which will begin in October.