A Supreme Sign? High court sides with insurers in Obamacare case

Ty Aravazhi Contributor
A Supreme Sign? High court sides with insurers in Obamacare case
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Cover: President Barack Obama delivers remarks regarding the Affordable Care Act, at Faneuil Hall in Boston, Mass., Oct. 30, 2013. (Official White House Photo by Amanda Lucidon)


A Supreme Signal? On Monday, in an 8-1 vote, the Supreme Court ruled the federal government owes health insurers approximately $12 billion under the terms of the Affordable Care Act (ACA). The decision reverses a “lower court’s ruling that Congress had suspended the government’s obligation to make such payments.”  The issue surrounds a “risk corridor” program that was included to subsidize insurers’ risk between 2014 and 2016. Since the ACA required insurers to broaden their coverage to include previously uninsured individuals, the risk corridor entitled these insurers to government compensation for losses they may have incurred. However, insurers sued because Congress passed legislation between 2015 and 2017 that prevented the Department of Health and Human Services from using general funds to pay the government’s risk corridor obligations.

In her prevailing opinion, Justice Sonia Sotomayor demanded that the government must honor its obligations to the insurers. In their suit, insurers accused the government of a “bait and switch”. They reasoned they were compelled into insuring more people under false pretenses, and argued the government owes them $12 billion through the original conditions of the ACA. In the Court’s majority ruling, Justice Sotomayor concluded, “…[The ACA] established a money-mandating obligation, that Congress did not repeal this obligation, and that petitioners may sue the Government for damages in the Court of Federal Claims.” Some have pointed to the nearly unanimous ruling as a sign of the Supreme Court becoming exhausted with the innumerable legal challenges being brought up against the ACA.

Republican and conservative voices have called the risk corridor a “bailout” for the insurance industry. Congressional Republicans had previously taken legislative action that prohibited the use of taxpayer money to fund the program, and it significantly cut the funds available to reimburse insurers. Somewhat ironically, these decisions may have exacerbated the problem, prompting insurers to sue the government. As the sole dissenter, Justice Samuel Alito echoed Republican sentiments and criticized the Court’s majority ruling. In his dissenting opinion, he writes, “Under the Court’s decision, billions of taxpayer dollars will be turned over to the insurance companies that bet unsuccessfully on the success of the program in question.” He further explains that, under federal law, insurers were not entitled to bring the lawsuit in the first place.

Flag This: This case represents only one of the countless legal challenges the ACA has faced since it was enacted. In this instance, however, it was Congressional Republicans’ actions that instigated the lawsuit, which eventually reached the Supreme Court. The Court’s ruling can, in effect, be considered a tacit approval of the original conditions set by the ACA, and a dismissal of Congressional Republicans’ attempts to nullify those conditions. As mentioned, the Court’s ruling on the issue may be an sign of how it will rule on future cases that involve the ACA. Another case by Republican governors challenging the individual mandate penalty is making its way through the court system, and some believe the case will be tossed out by the Supreme Court based on its decision in this matter.