The Supreme Court has agreed to hear three cases filed by insurers against the federal government over more than $12 billion in Affordable Care Act (ACA) risk corridor payments.
The court granted (PDF) petitions for writ of certiorari in the three lawsuits on Monday, allowing Moda Health Plan, Maine Community Health Options and Land of Lincoln Mutual Health the opportunity to appeal a federal appeals court ruling that rejected their request for the payments.
The three lawsuits will be consolidated before the Supreme Court, according to Monday’s order.
The risk corridors were established by the ACA to protect payers from incurring massive gains or losses when establishing health plans on the law’s insurance exchanges. The program would redistribute payments to insurers that were thriving on the markets to those who were struggling.
A Republican-controlled Congress, however, capped the payments in 2014, likening the program to a “bailout” of insurers. This change played a role in the sky-high premiums in some regions on the exchanges and was a factor in some insurers’ decisions to exit the marketplaces altogether.
A number of insurers also responded by suing the government to recover the payments, to varying success. A federal district court ruled in favor of Moda Health in 2017, but the appeals court overturned that ruling a year ago.
The Department of Justice submitted a brief to the Supreme Court on the matter last month, asking it to dismiss the cases. It argued that congressional action superseded its authority to make the risk corridor payments—an opinion shared by the appeals court.
They also argued that it’s unlikely insurers got into the exchanges solely because of the risk corridor program, but instead because they saw a potential business avenue.
In a response brief (PDF), Moda Health likened the promise of the risk corridors to a “bait-and-switch.”
“The government acknowledges that providing unprecedented insurance on the new exchanges was a risky enterprise, and that risk corridor payments were designed to induce insurers to provide coverage despite those risks,” the insurer wrote. “But in the government’s view, the real risk was relying on the government to keep its word.”