Court rules against insurers seeking $12B in ACA risk corridor payments

In a Thursday, June 14, ruling, a federal appellate court denied claims from health insurers who claimed they were owed billions of dollars from an Affordable Care Act (ACA) program. The court ruled 2-1 against two insurers who wanted the federal government needed to repay them for covering sicker, more expensive patients than initially expected.

“Congress clearly indicated its intent here,” according to the court 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.”

The lawsuit was one of dozens asking for repayments from the federal government—totaling some $12 billion in risk corridor payments. The initial program, enacted alongside the ACA, involved insurers paying into a fund that would help cover insurers who suffered heavy losses due to covering more at-risk populations. It stalled, though, when too many insurers requested compensation to cover losses.

In the first year, the risk corridor payments were only able to cover 12.6 percent of payments to insurers. The court ruled the government did not have to make payments to insurers because Congressional action called for the program to be budget neutral.

The ruling will not add to instability in the ACA marketplaces, because the money sought by insurers was for past losses.

“They’ll certainly be sad, but it shouldn’t affect the market going forward,” Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation, told Politico. “This is basically water under the bridge.“

But, he said, the ruling could lead to skepticism from insurers when dealing with the federal government.