The federal government must pay Obamacare insurer Moda Health Plan $214 million, with a federal judge agreeing the government gave the company the short shrift.
The U.S. Court of Federal Claims issued an opinion Thursday siding with the Oregon company about Obamacare’s risk corridor payment program. Moda is one of 11 insurers suing the federal government.
The court found that the government “unlawfully withheld risk corridor payments from Moda, and is therefore liable.”
The program was created to entice insurers to sign up for Obamacare’s exchanges. To mitigate the uncertainty with the new market, the risk corridor program forced insurers with big profits to pay the federal government, which in turn gave payments to insurers that were losing money.
But things haven’t worked out that way. The Republican-controlled Congress put a rider in a spending bill in 2014 that forced the program to be budget neutral, meaning that the government could pay out only what it took in from insurers.
The government didn’t collect that much money in 2014, the first year of the program’s operation. And money-losing insurers requested close to $3 billion in payments but received only $362 million.
The federal government said that all of the payments for 2015’s coverage year will go toward paying off the balance of 2014. The program expired after the 2016 coverage year.
Insurers didn’t take too kindly to the delay and have complained that they needed the full amounts.
The judge in the Moda case ruled that the Affordable Care Act required annual payments to insurers and that it offered a “unilateral contract” that it didn’t meet.
Seven other insurers are suing the federal government in the Court of Federal Claims. Another three are suing the government in federal court.
