A federal appeals court on Thursday ruled that insurers are not entitled to collect billions of dollars they claim the federal government owes as part of an ObamaCare program.
The three judge panel ruled 2-1, giving a win to conservatives who think the payments under ObamaCare’s risk corridor program are illegal bailouts.
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The lawsuit claimed two insurers were owed hundreds of millions of dollars from the program, which was created in 2014 to help cushion insurers from major losses during the early years of the law.
The court agreed with the Trump administration that insurers are not owed any money, because congressional Republicans passed legislation that required the program to be budget neutral. The federal government could only pay out what it took in and was not able to tap other sources of money to pay for insurers losses.
“Congress clearly indicated its intent here,” the court ruled. “It asked GAO [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.”
The insurers are likely to appeal and seek a review by the full court, rather than just a panel. If that doesn’t succeed, the next step would be an appeal to the Supreme Court.
Dozens of other insurers have filed similar lawsuits over the risk corridors. All told, insurers say the government owes them nearly $12 billion. The decision could set a precedent on the pending lawsuits.
The risk corridor program was intended to encourage insurers to participate in the ObamaCare exchanges. The idea was to establish a fund that would pay insurers who suffered heavy losses because they had too many sick people on their rolls and did not make enough money off premiums.
But the program struggled because too many insurers requested risk corridor money and too few paid into the fund. Insurers were left with a hole in their balance sheets on top of other ObamaCare-related problems they were already facing.