On Monday, April 27, 2020, the US Supreme Court upheld a provision of the Affordable Care Act (ACA) that Congress had blocked. The issue involved the “Risk Corridors” provisions of the ACA and whether or not Congress could renege on a provision that sought to level health insurance financing in the first years of the ACA. In 2014 insurance companies were to receive a payment if health costs exceeded what had been calculated by a formula created in the ACA.
Conversely, health insurance companies would have to pay the government if health care costs were under what had been calculated. The ACA provision was intended as a way to smooth the transition to the new health care law. The Risk corridor provision applied during the first three years of the ACA starting in 2014. The Republican-controlled Congress blocked the payment in each of the three years through a restriction written into annual appropriations legislation. The net payout over the three years should have been $12 billion, although some companies paid back the government under the provisions.
The Supreme Court ruled by an 8 to 1 margin that Congress could not violate the law. Justice Sam Alito was the sole vote against the majority opinion. The case had been brought by Maine Community Health Options, Blue Cross and Blue Shield of North Carolina, Land of Lincoln Mutual Health Insurance Company, and Moda Health Plan, Inc.
In writing for the majority, Justice Sonia Sotomayor said, “In establishing the temporary Risk Corridors program, Congress created a rare money-mandating obligation requiring the Federal Government to make payments under §1342’s formula. And by failing to appropriate enough sums for payments already owed, Congress did simply that and no more: The appropriation bills neither repealed nor discharged §1342’s unique obligation…These holdings reflect a principle as old as the Nation itself: The Government should honor its obligations.”
The ruling was the fifth time the Supreme Court has ruled on the ACA or some part of it. Each time they have upheld the law, although the 2012 ruling changed the nature of the Medicaid coverage. The Court will consider a more significant challenge by Republican attorneys general opponents in the next session. They argue that since the 2012 Supreme Court ruling hinged in part of the individual mandate to buy insurance enforced through the tax code that when Congress repealed that tax in the 2017 tax-cut package, that action means the entire ACA law should be struck down. There is the possibility that Court ruling could come before this year’s November election.
