On Dec. 10, the Supreme Court heard arguments on the four consolidated cases that deal with whether the government had an obligation to pay private health insurers to offset their losses in the early years of the Affordable Care Act. Although the three-year program for such offsets has ended, health insurers argue that the Department of Health and Human Services owes them more than $12 billion in unpaid funds.
Jeff Wurzburg, counsel at Norton Rose Fulbright, interviewed Georgetown law professor and health law scholar Katie M. Keith about the topic at a program during the 17th Annual Washington Health Law Summit.
Keith, who had attended the oral arguments, said the offsets – known as a risk corridor program – were devised so insurance companies that enrolled less-healthy people would receive compensation funded by payments from insurers with healthier patients. But an overabundance of less-healthy people enrolling in the programs meant companies that insured them lost money.
In 2013, insurance companies set their premiums for 2014 based on the promise that the government would pay them for losses.
But after Congress limited HHS’s ability to compensate insurers, insurance companies were only paid about 12 cents on the $1, Keith said.
Keith said that during oral arguments, “the justices were pretty sympathetic to the insurance companies.”
However, Justice Samuel Alito and Chief Justice John Roberts were skeptical that insurance companies “could bring this claim in the first place,” she said, and they asked whether there was a cause of action at all. Shouldn’t the companies, with all their lawyers, have seen that there was a “yellow light” about these payments coming in and insisted on an appropriations provision, they asked former Solicitor General Paul Clement, who argued for the insurance companies.
The government’s central argument, argued by Deputy Solicitor General Edwin Kneedler, is that because there was no explicit appropriation, their hands are tied, and they cannot make the payments.
Keith said that Justice Stephen Breyer used an analogy familiar to students of contracts law to posit that the government asking the insurance companies to perform a specific action was like a binding contract.
A decision is expected by the end of June.