Private health insurers will seek to convince the Supreme Court Tuesday that the federal government owes them $12 billion in lost revenue, for selling plans under the Affordable Care Act to persons who otherwise would not have qualified.
The case stems from a statute in the 2010 healthcare law, colloquially known as Obamacare, known as the "risk-corridors program" that required the government to partially reimburse insurers if costs rose unexpectedly due to insuring new customers -- while in turn requiring insurance companies to return any potential savings on a three-year cycle.
Insurers paid back $480 million in savings during the first cycle, but from 2014 to 2016, the government only partly reimbursed insurers who lost money by selling plans to people who wouldn't have previously qualified, the suit says.
The government pledged to make up the difference in future payments, but Congress failed to appropriate enough funds to do so.
The Federal Circuit Court of Appeals ruled in favor of the government, saying Congress implied a repeal of the risk-corridors problem through appropriations riders and the insurers are not entitled to any payments, as statutes are subject to change and should not be considered agreements.
"The ACA reserved to future Congresses the determinations whether and to what extent to fund the risk-corridors program," U.S. Solicitor General Noel Francisco wrote in his brief to the Supreme Court.
In their appeal, the insurers said the statute implies a contract on which the government cannot renege simply by failing to appropriate necessary funds.
The Supreme Court will determine whether the appropriations riders implied a repeal of the program.
Additionally, justices must rule on whether the government owes the insurance companies the $12 billion regardless of whether the program was repealed.
Some experts fear if the Supreme Court rules against the insurers, it might set a dangerous precedent that frees the government from accountability with future statutes.
"The government undermines its ability to use financial incentives to achieve policy objectives by, after the fact, not paying the amounts it promised," states an amicus brief filed by a group of economists.