The court’s ruling clears insurers to seek roughly $12 billion under an ACA program in place during early implementation of the 2010 health law that sought to mitigate financial risks for insurers that sold policies on ACA insurance exchanges, to persuade them to set insurance premiums at prices consumers would accept.
Fewer healthy people participated in the exchanges than anticipated, leading to larger financial losses than many insurers expected. Funding for the ACA “risk corridors” program was supposed to come at least partially through funds collected from insurers that did well on the exchanges. Those collections, however, were far short of what was needed to reimburse insurers that fared poorly, and the industry argued the government was legally obligated to cover the difference.
After the ACA was enacted, Congress in later budget years passed provisions that effectively prohibited the government from making payments under the program.
The Supreme Court, in an 8-1 opinion by Justice Sonia Sotomayor, said lawmakers had created money-mandated obligations under the program and couldn’t shirk them.
“These holdings reflect a principle as old as the nation itself: The government should honor its obligations,” Justice Sotomayor wrote in a 31-page opinion.
Insurers before the Supreme Court include Blue Cross and Blue Shield of North Carolina, Moda Health Plan Inc. and Land of Lincoln Mutual Health Insurance Co.
The lone dissenter to Monday’s ruling was Justice Samuel Alito, who said it was unclear whether federal law provided the insurers a legal right to go to court and seek damages from the federal government.
“The court infers a private right of action that has the effect of providing a massive bailout for insurance companies that took a calculated risk and lost,” Justice Alito wrote.