A coalition of insurance companies told the Supreme Court on Tuesday that the government must pay out $12 billion to help defray losses incurred on the Affordable Care Act (ACA) exchanges.
The ACA included a risk-sharing mechanism, which provides the government “shall pay” insurers to help cover any losses.
Congress has not appropriated money to make those payments, however, prompting the case now before the high court.
The Supreme Court seemed to agree Tuesday with arguments that Congress must pay out some $12 billion to health insurance companies as part of a program meant to mitigate risks caused by the Affordable Care Act (ACA).
The companies hope to collect those funds pursuant to a provision of the ACA that says the government “shall pay” insurers who incurred losses on the Obamacare exchanges. Despite that promise, Congress has not appropriated funds to compensate insurers.
“This case involves a massive government bait-and-switch and the fundamental question of whether the government has to keep its word after its money-mandating promises have induced reliance,” said Paul Clement, who represents the insurance companies before the high court.
Obamacare established “risk corridors” to help health insurers participating in ACA exchanges. Those companies took on previously uninsured clients and people with preexisting conditions, but could not charge higher premiums. The risk corridors set up a system for sharing profits and losses: If costs exceed premiums received, the insurers can collect payments from the government to offset losses. Similarly, if premiums received exceed costs, the insurer must pay a portion of its profits to the government.
For example, in 2016 health insurers paid $25 million into the risk corridors. By contrast, the government owed insurers $3.98 billion. Yet the Trump administration argues Congress is not obligated to make those payments, despite the law’s “shall pay” language.