The Trump administration is asking the Supreme Court to dismiss lawsuits from insurers seeking more than $12 billion in risk corridor payments.
The Department of Justice argues in a brief (PDF) that the government isn’t required to make the payments because the Affordable Care Act is intended to be budget neutral. The ACA created the risk corridors as a “temporary” program and left it up to future Congresses to decide whether to continue appropriating funds.
As legislators declined to do so, the administration is barred from making such payments, DOJ said.
“When Congress subsequently confronted those policy decisions in enacting appropriations acts for the relevant years, it expressly and repeatedly prohibited HHS from using the only potential source of funds to make payments out, other than payments in collected from profitable insurers under the risk-corridors program itself,” DOJ wrote.
The battle over ACA risk corridor payments has been ongoing since they ended in 2016. The program was established to make it easier for insurers to thrive in the exchanges by redistributing some of the payments from payers that were doing extremely well to those that were struggling, thus avoiding massive gains or losses.
However, conservatives called it a “bailout” for insurers and pushed hard against extending them.
A district judge sided with insurers in the case, but that decision was overturned by an appeals court last summer. The judges on the appeals court agreed with DOJ’s view, arguing that congressional action negated the Department of Health and Human Services’ obligation to make the payments.
Insurers aren’t entitled to the payments, DOJ said, and they argued it’s unlikely that the sole reason payers were willing to enter the exchanges is because of the risk corridor payments.
“It is more probable that insurers like petitioners elected to sell plans on the exchanges as a result of the powerful business incentives they had to do so,” DOJ said. “The exchanges are the only commercial channel through which insurers can reach consumers receiving federal subsidies, … a market segment that numbers in the millions.”