Court rules against health insurers in high-stakes Obamacare case

Court rules against health insurers in high-stakes Obamacare case

By Gary Gately   
Published
The appeals court decision marks a victory for President Donald Trump and GOP lawmakers. (WhiteHouse.gov)

WASHINGTON  A health insurance company said Thursday it would appeal a court’s ruling that the U.S. government isn’t obligated to pay health insurers billions of dollars they claim they’re owed under an Obamacare program.

In a 2-1 ruling, a panel of the U.S. Circuit Court of Appeals for the Federal Circuit here rejected claims by Oregon-based Moda Health and Chicago-based Land of Lincoln Mutual Health Insurance Co. The insurers argued the government owed them hundreds of millions of dollars under former President Barack Obama’s signature Affordable Care Act.

“We are disappointed by today’s decision,” said Robert Gootee, president and CEO of Moda, in a statement hours after the ruling. “If it is upheld on appeal, it will effectively allow the federal government to walk away from its obligation to provide partial reimbursement for the financial losses Moda incurred when we stepped up to provide coverage to more than 100,000 Oregonians under the ACA.

“We continue to believe, as our trial court did, that the government’s obligation to us is clearly stated in the law and we will continue to pursue our claim on appeal.”

The appeals court’s decision represents a victory for the Trump administration and conservative Republicans, who argued the payments to the insurance companies would amount to an unlawful government bailout.

More than 30 insurers have filed similar suits, claiming the government owes them more than $12 billion under the Obamacare “risk corridors” program. That 2014 program stipulated that the federal government collect money from insurers for a fund that had been redistributed to insurers struggling in some health marketplaces.

The appeals court ruled that the government didn’t have to pay the insurers, under GOP legislation requiring the program not to pay out more than it took in.

“Congress clearly indicated its intent here,” the court said in the Obamacare ruling. “It asked [the Government Accountability Office] what funding would be available to make risk corridors payments, and it cut off the sole source of funding identified beyond payments in. It did so in each of the three years of the program’s existence.”

 A U.S. Court of Federal Claims judge had ruled in 2017 that Moda has a right to payments totaling about $200 million. But in 2016, another Claims Court judge had ruled against Land of Lincoln, which sought about $76 million.

The insurers argued they should receive the payments after the health marketplaces suffered poorer performance than expected in their first few years, leaving the government far short of funds to pay the insurers, as mandated by the Obamacare program.

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