Supreme Court Obamacare Ruling: Health Insurers Can Sue Government For Billions In Possible 'Bailout'

Update: 4:12 p.m. EDT

Mark Rust, who represented Land of Lincoln, hailed the ruling.

"Today the court has made it possible to trust in government promises, even if they are broken in the midst of discord and dysfunction," Rust said in an email to IBTimes. "Even though the delay in appropriations cost Land of Lincoln its business, at least the people of the state of Illinois are going to be made whole by the aggressive actions here of its liquidator. It should help all of us trust in the letter of the law again."

Original story

The U.S. Supreme Court on Monday ruled the federal government owes health insurance companies billions of dollars for reneging on promises to shield companies from losses under the Affordable Care Act. The insurers accused the government of “bait and switch” and claim losses of more than $12 billion.

The decision opens the way for insurers to sue the government in the Court of Federal Claims.
The suit combined complaints filed by four companies: Moda Health Plan, Blue Cross and Blue Shield of North Carolina, Land of Lincoln Mutual Health Insurance Co. and Maine Community Health Options.

Health plans wracked up losses almost immediately after the health insurance marketplaces opened in 2014. A temporary fund – the risk corridor program – was set up to help cover sicker customers and serve as an incentive for insurers to participate in the exchanges and keep premiums at a reasonable level.

Those who crafted the law had hoped those companies that made money on the exchanges would fund the now-expired program to reimburse companies that suffered losses. In a 2015 overhaul, Republican lawmakers barred the Department of Health and Human Services from providing the funds.

The high court, in an 8-1 decision, said the action did not release the government from its obligation.

“Contrary to the government’s contention, neither the appropriations clause nor the Anti-Deficiency Act addresses whether Congress itself can create or incur an obligation directly by statute,” the opinion said. “Nor does [the law’s] obligation-creating language turn on whether Congress expressly provided budget authority before appropriating funds. The government’s arguments also conflict with well-settled principles of statutory interpretation. … Congress did not impliedly repeal the obligation through its appropriations riders.”

In the majority opinion, Justice Sonia Sotomayor said: “The government should honor its obligations,” adding that’s a principle as old as the nation itself. Despite GOP arguments to the contrary, the program was not set up to be budget neutral.

In his dissent, Justice Samuel Alito said the ruling amounted to a bailout for the insurance industry.

"Under the court’s decision, billions of taxpayer dollars will be turned over to insurance companies that bet unsuccessfully on the success of the program in question," Alito wrote.

The ruling is yet another loss for the Trump administration, which has been trying to dismantle Obamacare from the get-go. The ruling itself has no impact on the ACA. The administration, however, is backing another suit filed by Republican-led states that would overturn the entire law.