Government's unpaid risk corridor tab swells to $12.3B

The federal government’s unpaid balance for the Affordable Care Act risk corridor program has now ballooned to $12.3 billion.

Data released this week from the Centers for Medicare & Medicaid Services show that insurers are owed about $4 billion for the 2016 benefit year. The expected payment toward the 2014 balance, meanwhile, was $25 million.

The risk corridor program, which ended in 2016, aimed to protect insurers from extreme gains and losses while operating on the ACA exchanges. Those with costs that are less than a set amount pay into the program, and those funds are then used to reimburse insurers with costs that exceed the baseline.

But the program's issues started with a provision tucked into an omnibus spending bill three years ago, which restricted it from paying out more than it receives in collections. Because what the government owes insurers has always exceeded what it collects, its debt to them keeps piling up.

The government owed insurers $5.8 billion for 2015, on top of a $2.5 billion tab for 2014. For both 2015 and 2016, the amount that the program collected from insurers has gone toward paying down the original deficit from 2014.

Insurers have responded to those shortfalls by suing the government, including a case recently filed by Humana that seeks $611 million in unpaid funds. There are now three dozen such lawsuits, including a class-action case involving about 150 insurers, per a recent Health Affairs Blog post.

So far, one of the most successful of the suits has been one filed by Moda Health, as a judge ruled in February that the government owed the insurer $214 million in back payments. Molina Healthcare also saw a favorable outcome, as a federal judge ruled in August that it was owed $52 million.

But other suits—including those filed by Maine Community Health Options, Land of Lincoln Mutual Health Insurance Company and Blue Cross and Blue Shield of North Carolina—have not been as successful.