Supreme Court to hear cases over ACA risk-corridor funds

Modern Healthcare ^ | 6-24-19 | Shelby Livingston

[spintreebob]

The U.S. Supreme Court said on Monday it will take up cases over whether the federal government must pay billions of dollars to health insurers that sold coverage on the Affordable Care Act exchanges.

The Supreme Court will consider whether the government had an obligation to pay private health insurers under the so-called "risk corridor" program that was meant to offset insurer losses in the early years of the ACA exchanges. That three-year program has ended, but health insurers argue the HHS owes them more than $12 billion in unpaid funds.

The Supreme Court will hear three consolidated cases during its next term that starts in October.

The risk-corridor program was established under the ACA as a safety net that would curb losses and profits in the first three years of the health insurance exchanges. It was designed to discourage insurers from raising premiums because of uncertainty over who would enroll in their plans.

Plans with greater than expected medical claims could recoup some of those losses, while insurers with lower than expected costs would pay into the program. But Congress in 2014 passed a provision requiring the program to be budget-neutral, which led to a massive shortfall.

Health insurers sued to recover the payments they argue were promised. The federal government has argued that it is not obligated to make good on that promise because Congress limited what funds could go towards risk-corridor payments through appropriations riders.

Lower court decisions have been mixed. Most recently, the U.S. Court of Appeals for the Federal Circuit in November 2018 refused to rehear cases from Oregon's Moda Health Plan and Illinois' Land of Lincoln Mutual Health Insurance Co. after ruling in June that the federal government did not owe them money. Four plans, including Moda, Blue Cross and Blue Shield of North Carolina, Land of Lincoln, and Maine Community Health Options, then petitioned the Supreme Court in February to hear their cases.

[monkeyshine]

It’s not a question of welfare. It’s a question of performance to an agreement. The insurers would not have offered that insurance at that price for that period of time without the inducement.

Medicaid is something else, and people come on and off it all the time based on their specific situation and the rules governing it at the time they intend to receive it. We wouldn’t go back and send bills to everyone who received Medicaid last year if we change the qualifications for it this year.

[spintreebob]

sounds like a double standard

[monkeyshine]

I don’t see it that way. To me this is simple, and I think it is rooted in common law and contract law. If I promise you $30 to drive me to the airport and you drive me there, you wouldn’t accept if I tried to pay only $20. We had an agreement. You performed based on my promise and you’d be right to expect me to perform to my end of our agreement.

The deal with the insurance companies was limited to certain policies, certain regions, and over a fixed period of time. It’s not eternal.

Medicaid is made available year after year but it is only available to those who qualify in the period they apply for it. Just because you got it last year doesn’t mean you’re entitled to it this year. And these insurance companies are not expecting to be reimbursed on an ongoing basis - only for what they were told they would be credited for offering those limited numbers of policies for that limited period of time.

I think the entire ACA was a boneheaded idea, a boondoggle for insurance companies, destructive to the country and the economy. But that’s not really relevant to my thinking here. A deal was made, they honored their end of the deal. We need to honor our end.