Feb 9, 2017

Court rules insurer is owed Obamacare "risk corridor" money

The U.S. Court of Claims on Thursday ruled the U.S. government owes Moda Health, an Oregon health insurer, $214 million in unpaid Obamacare "risk corridor" money, The Oregonion reports. The ruling — which focuses on money to help insurers with expensive patients — could have significant consequences for pending cases brought by other insurers across the nation.

Although the risk corridor payments were part of the original health care law, Congress later passed legislation requiring the program to be budget-neutral, meaning it wouldn't have any net cost to the government. When insurers overall underestimated the cost of their enrollees, this meant plans altogether lost billions of dollars.

Thursday's ruling says despite the budget-neutral provision, insurers are still owed the money by law. "The Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill," wrote Judge Thomas Wheeler. "To say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government."

Why this matters: More than a dozen other lawsuits have been filed by insurers claiming they're owed the money. However, this is the first victory for a plan and follows an earlier defeat in a different case, Washington and Lee law professor emeritus Tim Jost tells me. Not only could this encourage other insurers to file lawsuits, but it also means judges have ruled differently on the issue. This will likely have to be resolved in a federal appeals court.

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