The nation’s highest court grappled with a key Affordable Care Act (ACA) case Tuesday with $12 billion in payments to insurers hanging in the balance.
The Supreme Court heard oral arguments (PDF) in a consolidated set of lawsuits filed by health plans to secure risk corridor payments promised in the ACA to entice insurers into its marketplaces, and a number of the justices appeared sympathetic to the insurers.
The goal of the program was to safeguard insurers from massive losses on the exchanges. If a health plan was earning massive profits through ACA plans, the federal government would take some of those funds and redistribute them to plans with poor financial performance.
In 2014, Congress capped the funds, with Republicans slamming risk corridors as an insurer “slush fund” and a “bailout.”
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Insurers’ success in court on the risk corridor payments has been mixed so far, with a court siding with Moda Health in 2017—a decision that was later reversed on appeal. The Trump administration had previously called on the Supreme Court to toss the case.
Justice Elena Kagan, a Barack Obama appointee, said Congress’ efforts to stop the payments created a scenario where health plans are still obligated to pay into the system, but the federal government is not obligated to make the payments back to insurers.
“You pay in, that's obligatory,” she said. “We commit ourselves to paying out—it turns out, if we feel like it.”
Edwin Kneedler, deputy solicitor general arguing on behalf of the Department of Justice, disputed that characterization, saying Congress made clear it did not intend to apply its appropriation powers to the payments.
Chief Justice John Roberts, a Bush-era appointee, suggested it was clear insurers would not have entered the exchanges without these programs in place. Justice Brett Kavanaugh, the most recent justice added to the court, noted the law’s wording—simply that the federal government “shall pay” the fees—isn't inherently subject to appropriation.
Analysts at Vox and Fox News said the justices largely seemed sympathetic to the insurers’ case.
The healthcare industry will await the verdict alongside the still-pending ruling from the Fifth Circuit court on the legality of the entire ACA. That case will also likely need to be settled by the Supreme Court.