Dive Brief:
- A federal court ruled Friday that insurers are owed subsidies mandated by the Affordable Care Act to help them cover people with low incomes in the exchanges and the Trump administration violated the law when it halted the payments in 2017.
- In a separate but related ruling, the same court found that payers that were able to raise premiums to offset the loss of those payments in 2018, however, should not receive the entire unpaid amount.
- The judges with the U.S. Court of Appeals for the Federal District in their decision relied on a recent ruling in favor of insurers from the U.S. Supreme Court on a separate cost-sharing program in the ACA. “We see no sufficient basis for reaching a different conclusion,” they wrote.
Dive Insight:
The Affordable Care Act took into account that payers participating in the exchanges it created would be somewhat flying blind when setting premium rates for a new population. To safeguard them, multiple programs were established to help manage the inherent risk.
One of them was the risk corridors program, which was supposed to redistribute some of the profits insurers received in the exchanges to other companies seeing losses. But far more companies reported losses than profits, and the program quickly ran out of funds to pay out.
The Trump administration argued the ACA does not properly appropriate the funding anyway.
The high court, however, ruled in April those insurers are owed about $12 billion from the program and that the language indeed creates what is called a money-mandating provision.
The decisions released Friday use that precedent for one of the other risk programs, which provided the subsidies for coverage of people with low-incomes, called cost-sharing reduction payments.
HHS abruptly stopped making the payments in October 2017, making the argument that the money had not been appropriated. But litigation of the issue goes back farther. Republicans in Congress sued HHS in 2014 making the same claim.
In 2018, with the payments still halted, payers increased their premium rates to help account for the lack of cost-sharing reduction payments, and thus received additional premium tax credits (a practice known as silver loading). The judges Friday said that although they agreed with a February 2019 decision from the U.S. Court of Federal Claims that the payers were owed the payments, they disagreed that insurers should be reimbursed in full despite the 2018 premium adjustments.
“The complexity of the process cannot obscure the underlying economic reality that the government is paying at least some of the increased costs that the insurers incurred as a result of the government’s failure to make cost-sharing reduction payments,” they wrote.
The judges remanded the case back to the Court of Federal Claims to determine the amount Maine Community Health Options is owed, and instructed them to take into account what amount of silver loading can be attributed to the loss of the payments.
Montana Co-op is owed $1.23 million for missed 2017 payments and Sanford Health Plan is owed $360,254.
