Circumvention of Law in the Bail-Out of Health Insurers Crushed by Obamacare Losses

One Obamacare co-op, the Health Republic Insurance of Oregon, filed a $5 billion class-action suit after their company failed and was unable to collect payment due them under the Affordable Care Act’s Risk-Corridor program.  The program was supposed to bail out insurers who suffered losses using the fees paid into the program by participating insurers.

Noteworthy:

• The 2013 Health and Human Services regulation stated that “The risk corridors program is not statutorily required to be budget neutral. Regardless of the balance of payments and receipts, HHS will remit payments as required under section 1342 of the Affordable Care Act.” Regardless of the Constitution?
• The risk-corridor program became self-funded as a part of the 2016 Budget and the 2015 Cromnibus bill, a marriage between the continuing resolution (CR) and the omnibus spending bill. So now who pays?
• As a result, insurers are now forced to sue the government. If successful in their suit, they would be paid out of an appropriation fund called the Judgement Fund – administered by the Treasury Department. Hmmm, settlements?

Although bail-outs paid in the first year did, in fact, come from user fees, other carriers were forced to close down once the fees were used up. Critics concerned about the separation of powers say that the administration is turning a blind eye and “settling” suits under the Judgement Fund as a way to bailout failed insurers.

Congress has until June 24^th to file a brief.

In other news, Humana announced today that they are considering pulling out of the Obamacare market in 2017 due to a 46% first- quarter earnings drop attributed to the high cost of ACA individual plans and their consumer direct Medicare Advantage plans.