The Supreme Court ruled Monday that Congress must pay billions of dollars to health care insurance companies that suffered losses under Obamacare.
Four insurance companies sued Congress for refusing to live up to the Affordable Care Act’s original provisions that required reimbursements to insurers that lost money from covering high-risk patients.
The initial legislation did not appropriate funds for the payments but each year the government owed more money, reaching a total deficit of more than $12 billion.
In an 8-1 decision, the justices sided with the insurance companies and said Congress can’t rewrite the rules after companies got into the high-risk patient game.
“The first sign that the statute imposed an obligation is its mandatory language: ‘shall,’” wrote Justice Sonia Sotomayor for the court
The Affordable Care Act, passed in 2010, aimed to encourage insurers to participate in the exchange, creating the “risk corridors” program that would compensate insurers in the first three years if they lost a certain amount of money because of their participation.
Some companies lost a significant amount of money. In subsequent appropriations bills, however, Congress never allocated money for reimbursements.
The high court ruled that those appropriations bills “neither repealed nor discharged” the government’s obligation.
Justice Sotomayor noted the insurance companies that brought the challenge — Blue Cross and Blue Shield of North Carolina, Maine Community Health Options, Moda Health Plan Inc., and Land of Lincoln Mutual Health Insurance Company — can seek to collect the payment through an action at the Court of Federal Claims.
“These holdings reflect a principle as old as the nation itself: The government should honor its obligations,” she wrote.
Justice Samuel A. Alito Jr. disagreed with the majority, saying the court effectively provided “a massive bailout for insurance companies that took a calculated risk and lost.”
“These companies chose to participate in an Affordable Care Act program that they thought would be profitable,” he wrote.
Justice Alito said under the ruling, billions of taxpayer dollars will go to companies that had bet unsuccessfully on the program, which will have an immediate impact.
Stephen McBrady, a partner at Crowell & Moring, which represented Maine Community Health Options, cheered the decision.
“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,” he said.
Funding the “risk corridor” program became an issue on the 2016 campaign trail, with some Republicans in Congress promising to dismantle Obamacare through the appropriations process.
During the GOP primary, Sen. Marco Rubio of Florida touted hamstringing the program as a win in 2015.
“I am the only one running for president on the Republican side that’s ever scored a significant victory against Obamacare,” Mr. Rubio had told primary voters in New Hampshire. “Not just a speech, a real victory.”
• Tom Howell Jr. contributed to this report.