SCOTUSblog by Amy Howe 12/4/2019
Argument preview: Justices to consider Affordable Care Act, risk corridors and implied repeals
In July, the U.S. Court of Appeals for the 5th Circuit heard oral argument in a challenge to the validity of the Affordable Care Act. Although there is no way to know when that court will issue its opinion, the loser is expected to ask the Supreme Court to weigh in, in what could be a major ruling. Next week, the justices will hear oral argument in another case involving the ACA – specifically, a provision that was intended to help mitigate the risks insurers faced in offering health plans under the act. In 2014 and the following years, Congress passed appropriations measures that limited the funding that would be available to compensate insurers for their losses. The insurers say that these measures resulted in a “bait-and-switch of staggering dimensions in which the government has paid insurers $12 billion less than what was promised.†The government paints a very different picture, rejecting any suggestion that Congress decided to “expose the federal fisc†to “massive liability.â€
When it was enacted in 2010, the ACA established (among other things) “health benefit exchanges,†online marketplaces where individuals and small groups could buy health insurance. Because many of the people buying health insurance on the exchanges had been uninsured or underinsured, health-insurance companies had no way to know what kinds of medical costs these new customers might incur. The ACA also prohibited them from charging higher premiums based on an individual’s health. One way the ACA tried to mitigate the risks that insurers faced, while at the same time encouraging them to offer reasonably affordable plans, was by creating “risk corridors.†Under Section 1342 of the ACA, for the first three years in which the exchanges operated, insurers whose costs exceeded the premiums they collected would receive “payments out†from the government to help compensate for their losses, while insurers collecting premiums that exceeded their costs would have to make “payments in†to the government to share the benefits.
Under the ACA, people who had cheaper health plans that did not comply with the ACA were originally required to buy compliant policies by January 1, 2014. However, in November 2013, the Department of Health and Human Services announced a transition period, during which people with noncompliant policies could stay on their existing plans. Many of those people – who were generally healthy – opted to do so, leading to fewer healthy individuals buying health insurance on the exchanges. Because insurers had already set their premium rates for 2014, this produced greater losses for the insurers than they had expected.
More:
https://www.scotusblog.com/2019/12/argument-preview-justices-to-consider-affordable-care-act-risk-corridors-and-implied-repeals/#more-290614
