Supreme Court Offers Sympathetic Ear to Insurers Over $12B in ObamaCare Claims

The U.S. Supreme Court justices on Tuesday appeared sympathetic to claims made by health insurers pleading for $12 billion from the federal government under a program set up by the Obamacare law aimed at encouraging them to offer medical coverage to previously uninsured Americans, The Daily Caller reports.

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.

“HHS was required and empowered to make payments only to the extent Congress appropriated funds to do so — and Congress was free to decide whether and to what extent to fund those subsidies,” the Trump administration told the justices in legal filings.

Justice Brett Kavanaugh seemed to disagree and said when Congress avoids taking on financial obligations, it uses language like “subject to appropriations,” instead of or alongside “shall pay” clauses.

Justice Stephen Breyer compared the dispute to a paradigmatic contract case, in which one person, whose hat is stuck atop a flagpole, agrees to pay another $10 to retrieve the hat.

“Why does the government not have to pay its contracts, just like anybody else?” Breyer asked.

Chief Justice John Roberts asked Clement why the health insurers didn’t press for a guarantee of compensation before participating in the exchanges.

“You make a case at some length about the reliance of the insurance companies, they were basically seduced into this program, but they have good lawyers,” Roberts argued “I would have thought at some point they would have sat down and said, ‘well, why don’t we insist upon an appropriations provision before we put ourselves on the hook for $12 billion?’” Roberts said.

Justice Elena Kagan detected an apparent inconsistency in the government’s position. She said the administration reads the “shall pay” language in contradictory ways. “You pay in, that’s obligatory,” Kagan said. “We commit ourselves to paying out…if we feel like it. What kind of statute is that?”

The Trump Administration’s only friend in the case was Justice Samuel Alito, who approached Clement with skepticism. At one point, Alito asked if the Supreme Court has ever required Congress to pay out billions of dollars.

“Has there ever been a case where this Court has, in effect, required Congress to appropriate…billions of dollars for private businesses?” Alito asked.

Justice Neil Gorsuch did not ask questions of either side. A ruling is expected by June.

About Catherine Smith

Catherine Smith is a newcomer to Washington D.C. She met, and married an American journalist and moved to D.C from the U.K. She graduated with a B.A in Graphic, Media and Communications and worked in design and retail in the U.K.

Photo: Getty Images

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