Case over risk corridor payments to go before Supreme Court

About Joanne Kenen

Joanne Kenen, (@JoanneKenen) the health editor at Politico, has been AHCJ’s topic leader on health reform and curated related material at Follow her on Facebook.

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We wrote earlier this spring about a batch of ACA litigation still slogging its way through the courts, including one that the Supreme Court has just agreed to take. This is a challenge from health insurers who say the federal government owes them a great big bushel of money.

The case, which is consolidating three lawsuits known as Moda Health Plan v. United States, Maine Community Health Options v. United States, and Land of Lincoln Mutual Health Insurance v. United States, means that the government could have to pay out billions of dollars under the Affordable Care Act – while that very same federal government is still trying to dismantle the ACA in the Texas vs. Azar lawsuit that goes before an appeals court in July.

In the early years of the ACA a “risk corridor” program was designed to help insurers that ended up with a disproportionate number of sick, expensive beneficiaries. Congress didn’t kill that program but it did decide, after the ACA was passed and implemented, that it had to be “budget neutral” and not be what anti-ACA Republicans called an “insurance bailout.” That means that insurers only got 12 cents on the dollars. And they want the other 88.

While this particular case (now known as Moda Health Plan Inc. vs. United States) only involves three small insurers, it would set a precedent for other health plans – and the payments could end up around $12 billion.

The law does not represent an existential threat to the ACA, unlike the 2012 NFIB challenge or the 2015 King vs. Burwell case (or potentially the current Texas case). And it’s too late to help some of the co-ops that went under, in part because they didn’t get these payments. Nor can the ruling undo some of the damage caused — politically and to customers – when premiums went up. The failure to get these payments was not the only reason for spiking premiums, but it was a factor. The decision would present some troubling optics for the Trump administration – paying out billions to insurers in a program it’s still vowing to obliterate.

Lower courts had split on the risk corridor program. Those are the cases that are being consolidated and heard on a date yet to be set. Here’s some additional background from SCOTUSblog.

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