The U.S. Department of Justice (DOJ) told the U.S. Supreme Court Wednesday that health insurers are to entitled to collect $12.3 billion in Affordable Care Act (ACA) risk corridors program payments.
Congress voided any obligation for the federal government to make those payments when it expressly prohibited the U.S. Department of Health and Human Services (HHS) from using certain funds to make the payments, DOJ said in a new brief
The judges on the U.S. Court of Appeals for the Federal Circuit ruled 9-2 in support of the federal government’s position in 2018.
DOJ is asking the Supreme Court to uphold the appeals court decision, and to reject challenges from providers claiming that the U.S. government is still on the hook for the risk corridors program payments.
The ACA Risk Corridors Program
When Congress was developing the ACA, it created a new public exchange system, or family of online marketplaces, that consumers could use to shop for health coverage on an apples-to-apples basis and use federal premium tax credit subsidies to pay for the coverage.
The ACA drafters added the risk corridors program to persuade insurers to sell coverage through the exchange system, by protecting them against the risk of unexpected losses.
The ACA public exchange system came to life in October 2013, with the first coverage solid taking effect Jan. 1, 2014.
The risk corridors program was supposed to operate from 2014 through 2016. The program was designed to use cash from thriving exchange plan issuers to reimburse struggling plans.
Revenue from thriving issuers was much lower than demand for payments from struggling issuers, and Republicans in Congress put provisions in budget bills that required HHS to use only risk corridors program revenue to make the risk corridors program payments to issuers.
Carriers filed many suits seeking money damages with the Washington-based U.S. Court of Federal Claims. The suits generated a substantial amount of uncertainty, as judges at the court divided over whether the government had broken its risk corridors program promises.
Moda Health’s Position
“Like numerous other insurers, petitioners responded exactly as Congress intended, participating in the exchanges and charging lower premiums than they would have absent the government’s commitment to share some of the risk,” lawyers for Oregon-based Moda Health Plan Inc. said in a petition filed in February with the Supreme Court.
Moda is represented by Kirkland & Ellis, including partner Paul Clement, who was identified as counsel of record. Moda’s lawyers argued that “the net effect was a bait-and-switch of staggering dimensions in which the government has paid insurers $12 billion less than what was promised.”