Health Insurer Associations Praise Supreme Court Decision on Health Insurer Risk Corridors

April 27, 2020
Two major national health insurer associations praised the Supreme Court’s decision on Monday requiring the federal government to reimburse health insurers under a provision of the Affordable Care Act

On Monday, April 27, the U.S. Supreme Court ruled that health insurers can collect funding related to the risk-corridors provisions of the Affordable Care Act, in a victory for health insurers. Following the announcement of the ruling AHIP, America’s Health Insurance Plans, the umbrella nationwide association for health insurers, praised the 8-1 ruling, as did ACAP, the Association for Community Affiliated Plans, which represents 75 safety-net health plans nationwide. Both associations are based in Washington, D.C.

As the Associated Press’s Mark Sherman wrote on Monday morning, “The Supreme Court ruled Monday that insurance companies can collect $12 billion from the federal government to cover their losses in the early years of the health care law championed by President Barack Obama. Insurers are entitled to the money under a provision of the “Obamacare” health law that promised the companies a financial cushion for losses they might incur by selling coverage to people in the marketplaces created by the health care law, the justices said by an 8-1 vote.”

Further, Sherman wrote, “The program only lasted three years, but Congress inserted a provision in the Health and Human Services Department’s spending bills from 2015 to 2017 to limit payments under the “risk corridors” program. Both the Obama and Trump administrations had argued that the provision means the government has no obligation to pay. But Justice Sonia Sotomayor said in her opinion for the court that the congressional action was not sufficient to repeal the government’s commitment to pay. “These holdings reflect a principle as old as the Nation itself: The Government should honor its obligations,” Sotomayor wrote.”

Meanwhile, a non-bylined Reuters report noted that “The 8-1 ruling authored by liberal Justice Sonia Sotomayor paves the way for a significant one-time cash infusion for major companies such as Humana Inc, Anthem Inc and Centene Corp. The justices reversed a lower court's ruling that Congress had suspended the government's obligation to make such payments. The court agreed with insurers that said that the lower court ruling, if allowed to stand, would have let the government pull a "bait-and-switch" and withhold money the companies were promised. ‘The government should honor its obligations,’ Sotomayor wrote. Conservative Justice Samuel Alito was the sole dissenter, saying the court's ruling ‘has the effect of providing a massive bailout for insurance companies that took a calculated risk and lost.’”

As the Reuters report noted, “Moda Health Plan Inc and other insurers that sued to try to compel the U.S. Department of Health and Human Services (HHS) to make the payments have said the government was supposed to help them recover from early losses they suffered after the 2010 passage of the Affordable Care Act (ACA) under Democratic former President Barack Obama…. Unlike other court cases involving Obamacare, this dispute concerned only payments to insurers and did not directly challenge the law itself.”’

The Reuters article noted that “Other insurers involved in the case included Blue Cross and Blue Shield of North Carolina, Maine Community Health Options and Land of Lincoln Mutual Health Insurance Company. Payments would have come through the law's so-called risk corridor program designed to mitigate insurers' risks from 2014 to 2016, when they sold coverage to previously uninsured people through exchanges established under Obamacare.”

Health insurer associations praise ruling

In response to the decision, AHIP released a statement attributed to its president and CEO, Matt Eyles, regarding the decision in Maine Community Health Options v. United States, regarding the government’s responsibility to pay the 2014-16 transitional risk corridor payments statutorily required in the Affordable Care Act individual and small group markets. The statement began, “Millions of Americans rely on the individual and small group markets for their coverage and care, and they deserve a steady market that provides them with affordable choices. Health insurance providers are focused on delivering for them, and they depend on the federal government to be a fair and reliable business partner committed to the same goal.”

 Further, Eyles said, “The federal government made a clear commitment in the interest of building stable markets and making coverage more affordable for individuals and small employers.  Health insurance providers kept their commitments while incurring substantial losses. Today’s decision, as the Supreme Court observes, reflects ‘a principle as old as the Nation itself: The Government should honor its obligations.’ We appreciate that today’s Supreme Court 8-1 decision ensures that the federal government honors the obligations it made for services the private sector already delivered.”

In addition, ACAP released a statement attributed to its CEO, Margaret A. Murray. Murray stated that “The Supreme Court’s decision today upholds the integrity of the full faith and credit clause. It emphasizes the argument we have made all along—the government can’t renege on an unambiguous commitment in Federal law. ACAP-member plans entered the Marketplace with the clear understanding that risk corridor payments would take place as set forth in Federal law,” Murray said. “The government reneged, but our plans didn’t. They provided quality, affordable care to millions of Americans only to have the government leave them unpaid bills totaling hundreds of millions of dollars.”

“It’s absurd to ask health plans – or anyone else doing business with the United States government – to price in the notion that Congress might arbitrarily walk away from commitments it makes in Federal law. We’re relieved the Supreme Court agrees.

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