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 high 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 HHS owes them more than $12 billion in unpaid funds.
The court will hear three consolidated cases during its next term that starts in October.
The insurance lobbying group America's Health Insurance Plans praised the Supreme Court's willingness to consider the case.
"The Supreme Court's decision to hear this case recognizes how important it is for American businesses, including health insurance providers, to be able to rely on the federal government as a fair and reliable partner," AHIP CEO Matt Eyles said in a statement. "Strong, stable and predictable partnerships between the private and the public sector are an essential part of our nation's economy, and our industry looks forward to having this matter heard before the Court."
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 toward risk-corridor payments through appropriations riders.
Crowell & Moring partner Stephen McBrady, who represents Maine Community Health Options—one of the insurers that petitioned the Supreme Court to hear its case—said in a statement that the government has not lived up to its obligations while insurers have.
"Under the ACA, the government had reciprocal statutory obligations to health plans," he said. "In the world of healthcare and government contracting, the federal government benefits from the participation of private companies, who perform critical services on behalf of the government, and the delicate balance between public and private entities can only be maintained if the government can be relied on to meet its statutory and contractual obligations."
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, Moda, Blue Cross and Blue Shield of North Carolina, the now-shuttered Land of Lincoln, and Maine Community Health Options, then petitioned the Supreme Court in February to hear their cases.
