The Supreme Court on Tuesday heard from a trio of small insurance companies that say they were ripped off by the Obama administration's Affordable Care Act and want the feds to pay the $12 billion they lost.
Maine Community Health Options, Moda Health Plan Inc. and Land of Lincoln Mutual Health petitioned the high court to force the government to make good on its promise to help with costs suffered by insurance companies that operated at a loss under Obamacare's marketplace.
The lawyer representing the insurers said the government promised to pay a percentage of the amount incurred over a three-year period if insurers lost money.
Insurers did suffer losses on Obamacare's marketplace, as customers' claims exceeded expectations, but Congress later enacted appropriation riders restricting the funds that could be used to pay the insurers. The Federal Circuit Court sided with the government, saying the subsequent moves by Congress repealed the original guarantee from when Obamacare was passed.
The insurers appealed to the Supreme Court, arguing the government's "bait and switch" led to the federal government paying them $12 billion less than what they were guaranteed.
"It is not the law that the government can simply make its obligations go away by deciding that, after the fact, after the obligations have been incurred, after the counterparty has been — has performed, we're just not going to appropriate the money," argued Paul Clement, the attorney representing the insurers.
"I totally get the point that Congress has the power of the purse, but Congress is not disabled from making an enforceable promise to open the purse in the future on specified terms."
The government, though, contends there was no contract created by Congress's legislation.
"A contract is very different from a statute. This is a general statute providing — it's one of many subsidies under the Affordable Care Act for people who participate in a private market," said Edwin Kneedler, a lawyer for the Justice Department.
"They — the insurers were not performing services for the government. They weren't working for the government. They weren't furnishing goods to the government."
Justices from both wings of the court appeared skeptical there wasn't a guarantee to pay up.
"So why does the government not have to pay its contracts, just like anybody else?" asked Justice Stephen G. Breyer.
Justice Brett M. Kavanaugh, meanwhile, quizzed the government's attorney about whether Congress can pass appropriations to escape payment.
"So is every congressional promise to pay, therefore, subject to an implicit subject to appropriations caveat?" he asked.
A ruling is expected by the end of June.