The U.S. Supreme Court on Monday ruled 8-1 that the federal government must pay Lewiston-based Maine Community Health Options $59 million to reimburse the health insurance company for losses under the Affordable Care Act’s Risk Corridors program.
The key question in the case was a civic one: Can Congress repeal a law without explicitly repealing that law?
Justice Sonia Sotomayor said in her opinion for the majority that the congressional action was not sufficient to repeal the government’s commitment to pay back insurance companies.
“These holdings reflect a principle as old as the nation itself: The government should honor its obligations,” Sotomayor wrote.
The majority also found that Congress did not repeal or suspend the government’s obligation to pay insurers when it passed appropriations bills with riders that prohibited the use of funds for risk-corridor payments because it did not repeal the law itself that originally authorized them.
Riders is the informal term for amendments attached to bills, including appropriations bills, that are intended to change the permanent law governing a program funded by the bill, according to the glossary on the U.S. Senate’s website.
In the lone dissent, Justice Samuel Alito wrote that the court’s decision “has the effect of providing a massive bailout for insurance companies that took a calculated risk and lost. These companies chose to participate in an Affordable Care Act program that they thought would be profitable.”
The Lewiston nonprofit was one of several insurers in Alaska, Illinois, Maine, North Carolina, Oregon and Washington, that sued the government. They claimed they are owed a total of $12 billion and the justices agreed.
That money was part of the Affordable Care Act’s “risk corridor” program, meant to entice insurers to participate in the new market during the first three years of the law’s implementation from 2014 to 2016. Insurers with lower-than-expected costs were to pay the government back and the money went to insurers bearing higher costs.
Early in the implementation of the program, the pool ran short of what insurers were owed and congressional Republicans opposed to the health care law championed by then-Democratic President Barack Obama attached a rider to a spending bill that removed the program’s funding, which wasn’t specifically provided in the language of the Affordable Care Act.
That move was a factor in the closures of most of the health insurance co-ops that formed under the law. But four remain, including Community Health Options. It sued the federal government in 2016 over the move. The justices heard oral arguments in December.
Kevin Lewis, president and CEO of Community Health Options, praised the ruling.
“The Supreme Court’s decision is a vindication of the rule of law and should restore faith that a contract with the government is not by itself a risky undertaking,” he said. “This win is particularly meaningful for us as a non-profit health plan because it’s a win for our membership of individuals, families and businesses.”
The money is expected to be placed in the organization’s reserve account.
The case is separate from a challenge to the health care law that the court has agreed to hear in its term that begins in October.
The Associated Press contributed to this report.