Supreme Court rejects review of insurers’ ACA funding lawsuit

The U.S Supreme Court on Monday rejected the latest appeal by private insurance companies seeking reimbursement for losses over claims covered under the Affordable Care Act.

Maine Community Health Options and Community Health Choice from Texas asked the high court in February to reverse a lower-court ruling that only would permit them to recoup a portion of the money the insurers say the federal government owes them. Justices declined to hear the appeal, leaving it in the hands of other courts, where this issue remains active.

A federal circuit court ruled last August that the federal government would have to reimburse insurers a portion of the funds the Affordable Care Act promised them under the law’s cost-sharing reduction provisions.

That part of the law provides discounts on out-of-pocket costs like deductibles and coinsurance to the lowest-income health insurance exchange customers. The federal government is supposed to repay insurance companies for that lost revenue but the President Donald Trump administration halted payments in 2017. The federal government has withheld as much as $7 billion from more than 100 insurance companies during 2017 through 2019, the Maine and Texas insurers allege in their petition.

After Republicans gained control of Congress following the 2010 midterm elections, they executed numerous changes to the underlying statute, including eliminating funding for ACA programs designed as financial backstops for insurers. President Donald Trump also made administrative and regulatory changes to the ACA during his term.

The original law included both short- and long-term funding streams to protect insurance companies from suffering major losses because they enrolled a sicker-than-average population. Since those funds went away, insurance companies have been fighting in the courts for money to which they contend they are legally entitled.

Among the cuts Congress made in previous years was eliminating the ACA’s “risk corridors” program. The risk-corridor program was created in the ACA as a safety net to curb excessive losses and profits in the first three years of the health insurance exchanges. Congress created it to discourage insurers from increasing premiums out of concern over who would enroll in their plans.

In April 2020, the Supreme Court ruled 8-1 that insurers are able to sue the government for reimbursements promised as part of the ACA’s temporary “risk corridors” program. While the ruling did open the door to insurers getting relief from the courts, it does not require Congress to appropriate the money. Instead, insurers could get money on a case-by-case basis if they prevail in court.

Earlier this year Democratic Reps. Brian Higgins (N.Y.), Joe Courtney (Conn.), John Larson (Conn.) and Peter Welch (Vt.) introduced the Medicare Buy-In and Health Care Stabilization Act of 2021, which includes provisions to reauthorize the “risk corridor” program for the years 2023 through 2026. The bill was referred to the House Energy and Commerce Committee in April.

The ACA survived its latest challenge before the Supreme Court last week. Th plaintiffs — a group of Republican elected officials— argued the law became unconstitutional after Congress repealed the individual mandate penalties but left the mandate itself on the books. Justice Stephen Breyer wrote in his opinion that the plaintiffs’ injury— the costs of purchasing health insurance— is not “causally” connected to possible government action.