Washington DC is on the hook for billions of dollars thanks to a Supreme Court decision. Following an 8-1 decision on Monday, DC will pay out $12 billion to health insurers. This money is to be paid to insurers who enrolled in the Affordable Care Act’s “Risk Corridor.”
The decision, which leaves the federal government on the hook for billions of dollars, reverses a decision by a lower court. As a result, the insurance agency gets a huge windfall. Insurers that offered plans through the online Obamacare marketplace are to be paid the difference in funds per the Supreme Court’s decision.
The risk corridor refers to a section of online health plans that the government stated would subsidize unprofitable health plans. The program worked by limiting both profits and losses that insurers could expect on their plans. The idea held that, by flattening profits, they would incentivize standardized and affordable care. The plans could cover anything from atrial fibrillation treatment to basic checkups.
In order to cover for unprofitable plans on the marketplace, the government taxed all plans that made over a certain amount. Unsurprisingly, few plans made more money than they paid out, as the highly insurer-profitable plans were unpopular with customers.
This eventually resulted in a $12 billion deficit. The federal government attempted to sidestep this cost, leading to the court cases.
“We conclude that §1342 of the Affordable Care Act established a money-mandating obligation, that Congress did not repeal this obligation, and that petitioners may sue the Government for damages in the Court of Federal Claims,” wrote Justice Sonia Sotomayor of the court’s opinion.
The lower courts found that the federal government essentially repealed the program by adding riders and other implied methods. The Supreme Court, however, did not find this argument compelling.
Justice Sotomayor continued, “repeals by implication are not favored.”
Thus, the court found that the federal government was still bound to repay the money.
As for dissent, Justice Samuel Alito was the one justice to vote in favor of the federal government. Alito found that the Tucker Act covered the case. This act says the federal government is free from lawsuits under certain conditions. It holds that lawsuits based on the Constitution or acts of Congress are null when leveled against the federal government.
In Alito’s dissent, he wrote, “Today, 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.”
