The federal government owes billions of dollars to health insurers under an Affordable Care Act provision intended to help insurers mitigate risk, the U.S. Supreme Court has ruled.
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In an 8-to-1 vote announced April 27, justices sided with the plaintiff health plans in Maine Community Health Options v. United States, ruling that the risk corridors statute created a government obligation to pay insurers the full amount originally calculated and that appropriation measures later passed by Congress did not repeal this obligation.
“In establishing the temporary risk corridors program, Congress created a rare money-mandating obligation requiring the federal government to make payments under [Section 1342 of the Affordable Care Act’s] formula,” Associate Justice Sonia Sotomayor wrote in the majority opinion. “Lacking other statutory paths to relief ... petitioners may seek to collect payment through a damages action in the Court of Federal Claims.”
Maine Community Health Options v. United States, which consolidates several lawsuits against the government, centers on the ACA’s risk corridor program, which required the U.S. Department of Health & Human Services to collect funds from profitable insurers that offered qualified health plans under the exchanges and distribute the funds to insurers with excessive losses. Collections from profitable insurers under the program fell short in 2014, 2015, and 2016, while losses steadily grew, resulting in the HHS paying about 12 cents on the dollar in payments to insurers. More than 150 insurers now allege they were shortchanged by more than $12 billion all together.
The U.S. Department of Justice countered that the government is not required to pay the plans because of measures passed by Congress in 2014 and later years that limited the funding available to compensate insurers for their losses.
The U.S. Court of Appeals for the Federal Circuit decided in favor of the government, ruling that while the ACA required the government to compensate the insurers for their losses, the appropriations measures repealed or suspended that requirement.
The U.S. Supreme Court disagreed. Justices noted that even after Congress enacted the first rider, HHS and the Centers for Medicare & Medicaid Services reiterated that the ACA requires the Secretary to make full payments to issuers and that “HHS [would] record risk corridors payments due as an obligation of the United States government for which full payment is required,” according to the Supreme Court opinion.
“They understood that profitable insurers’ payments to the government would not dispel the Secretary’s obligation to pay unprofitable insurers, even ‘in the event of a shortfall,’ ” Justice Sotomayor wrote in the majority opinion.
Associate Justice Samuel Alito Jr. however, took issue with his fellow justices’ decision. In his dissenting opinion, Justice Alito wrote that under the ruling, billions of taxpayer dollars will be turned over to insurance companies that bet unsuccessfully on the success of the program in question.
“This money will have to be paid even though Congress has pointedly declined to appropriate money for that purpose,” he wrote. “Not only will today’s decision have a massive immediate impact, its potential consequences go much further.”
The high court remanded the consolidated cases to the lower court for further proceedings on details of the disbursement.