Insurance companies looking for billions of dollars

By  | 

WASHINGTON (Gray DC) -- An Obamacare argument is in front of the Supreme Court this week. Health insurance companies in Maine, Alaska, and elsewhere around the country say they are owed a lot of money by the federal government, roughly $12 billion, because of a deal struck under the Affordable Care Act. The Trump administration says it does not have to pay. A legal expert says this case could have a massive impact beyond health care.

Insurance companies are saying they are victims of a government bait and switch under the Affordable Care Act. (Source: Gray DC)

When the Affordable Care Act became law, the government tried to incentivize companies like Moda Health Plan, which served Alaska, and Maine Community Health Options to sell insurance on the Obamacare market. It was a new market filled with uncertainty. Katie Keith, a health care legal expert from Georgetown University says the government vowed to pay out insurers who suffered financial losses.

"The idea there was to make sure insurance companies felt comfortable coming into this new program," said Keith.

Some companies took big losses, but also lost their safety net. A Congressional funding bill passed after the initial agreement limited the amount of compensation for these insurers. Moda and Maine Community are calling it a bait and switch. Moda had to stop selling insurance in Alaska, in turn raising health care prices for Alaskans. If the Supreme Court justices do not find in their favor, they argue it sets a bad precedent.

"Does that produce a chilling effect about businesses willingness maybe to partner with the federal government on other important initiatives?" said Keith.

If the justices rule in favor of the insurers, Keith says it would be an override of a mandate from Congress.

"The power of the purse sits with members of Congress. The White House, whoever's in it, doesn't get to decide willy nilly how that money is spent," said Keith.

She says the Obama and Trump Administrations are on the same side in this one, with both feeling they are not legally able to pay out the $12 billion to these companies. Keith says the solicitor general will argue lawmakers, not the president, make these funding decisions.

"This is really important for the future of how the government is able to get things done or not," said Keith.

Arguments are slated for 10 am Tuesday at the Supreme Court.

Copyright 2019 Gray DC. All rights reserved.