Insurers are owed $12 billion in unpaid federal subsidies, the Supreme Court ruled in an 8-1 decision on Monday.
The plaintiffs in the case, which include Maine Community Health Options, Moda Health Plan and Blue Cross and Blue Shield of North Carolina, said they were owed millions in unpaid subsidies promised as part of the Affordable Care Act’s risk corridor program. Maine Community Health Options has argued that it was owed $57 million, while Blue Cross NC has said it was owed more than $147 million.
The now-defunct risk corridor program was intended to help offset the risk of health plans launching plans in the first three years after the ACA exchanges were established. The program ran from 2014 to 2016, with the government collecting funds from profitable plans and paying out those that had experienced losses. But it wasn’t budget neutral.
“Each year, the government owed more money to unprofitable insurers than profitable insurers owed to the government, resulting in a total deficit of more than $12 billion,” according to court documents.
In 2015, Congress passed an appropriations bill that would bar the funds from being used to cover payments to insurers under the risk corridor program. But according to the Supreme Court’s ruling, those bills don’t release the government from its mandate to fund the program.
In an 8-1 ruling, the court determined that the government had an obligation to make the promised payments. Plaintiffs would be able to seek the unpaid amount as well as damages in the Court of Federal Claims.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“These holdings reflect a principle as old as the nation itself: The government should honor its obligations,” the court wrote in its opinion.
Justice Samuel Alito wrote the sole dissenting opinion, saying the payments would provide “a massive bailout for insurance companies that took a calculated risk and lost.”
The case is Maine Community Health Options v. United States.
Photo credit: Mykola Velychko, Getty Images
