Sen. Marco Rubio has been bragging he stopped a federal insurance “bailout” through Obamacare, but there’s a place where insurers still could collect the money: a pile of money awarded by the U.S. Court of Federal Claims.
If insurers chose, they could seek funds they were promised under the Affordable Care Act by appealing to the court, which decides disputes between the government and parties claiming they weren’t paid money owed under a federal contract or a statute.
So far, the thorny issue hasn’t moved onto legal turf, even though insurers are irate that they’re getting only a small fraction of the money the government was supposed to pay them for losses they incurred covering newly insured Americans under Obamacare.
Insurance industry sources say there have been discussions about whether to bring a lawsuit, although there are questions about whether it’s too soon since the federal government has two more years to make the payments.
The Blue Cross Blue Shield Association, whose plans cover more Obamacare customers than any other insurer, didn’t answer questions about whether legal proceedings are in the works. America’s Health Insurance Plans didn’t respond to inquiries, either.
The controversy revolves around a program included in President Obama’s healthcare law called “risk corridors,” where insurers making a profit from the new enrollees would pay fees to the government, which would in turn make payments to insurers losing money. The aim was to ease the transition for insurers as they covered millions of new customers.
Republicans have labeled the program a “bailout” for insurers and incorporated it into their harshest criticisms of the controversial healthcare law. Most recently, Rubio has touted it on the presidential campaign trail as an example of where he says he stopped Obamacare in a concrete way.
“Everybody running for president on the Republican side wants to repeal Obamacare,” the Florida Republican told Reuters Tuesday. “I’m the only one running that’s actually ever scored a victory against Obamacare.”
Rubio did help get a provision included in a December 2014 spending bill that banned the Department of Health and Human Services from shifting money in its budget to cover the payments. And there’s little chance the Republican-led Congress would ever provide the funds to cover the payments.
But Congress didn’t actually repeal the risk corridor program, which, according to legal experts, means the federal government is still required to make the payments. And that money could be provided through an unlimited appropriation Congress provides each year to the federal claims court.
“Even if there’s no appropriation for the risk corridor program itself, there is an appropriation for court judgments,” said Nicholas Bagley, a health law professor at the University of Michigan.
Congress established the federal claims court just before the Civil War to allow government contractors with payment grievances to bring their cases. To bring a lawsuit, a party must prove that it was owed a payment from the federal government but didn’t receive it.
“What you have to demonstrate is you really have an entitlement to money,” said Gregory Sisk, a professor at the University of St. Thomas School of Law.
While the major health insurers offering Obamacare plans do appear to be entitled to payments under the Affordable Care Act for their losses, the administration announced in the fall that there was only enough funding available to cover 12.6 percent of the claims.
It’s not clear at this point, however, whether insurers will turn to the legal system or continue hoping the administration will be able to make up the payments next year. Bagley said they are probably reticent to fight a court battle with the administration if some other pathway appears tenable.
“It would be much cleaner if they could just get this from the feds, so I think they’re leaning hard on Congress and the executive branch to do this,” Bagley said.
And a lawsuit in the federal claims court could take years to resolve. Insurers already are grappling with losses from the new Obamacare enrollees, with the largest company, UnitedHealth, threatening to pull out of the marketplaces entirely.
“It would take time to resolve this litigation, however, and the insurers most affected by the curtailed risk corridors do not have time,” said Tim Jost, a health law professor at Washington and Lee University and a vocal supporter of the healthcare law. “They are insolvent.”
