WASHINGTON -- The Supreme Court gave a sympathetic hearing Tuesday to health insurers who were promised their losses would be covered if they expanded coverage under the Affordable Care Act, only to have the Republican-controlled Congress later refuse to pay.
"This case involves a massive government bait-and-switch and the fundamental question of whether the government has to keep its word," Washington attorney Paul D. Clement told the court.
Most of the justices sounded both surprised and skeptical of the Justice Department's claim that Congress was free from having to pay for its past promises.
At issue is a provision of the Affordable Care Act of 2010, also known as "Obamacare," that encouraged health insurers to offer coverage at reasonable rates to people who had been denied because of preexisting medical conditions. The law said the government "shall pay" insurers if they lost money by offering this coverage. However, they were required to pay the government if they made extra profits from the high-risk group.
But when the coverage began in 2014, the losses for insurers were higher than expected. And a year later, Republican lawmakers said they would not appropriate the money to cover those losses from 2014 to 2016. Many GOP lawmakers characterized the payments under the so-called risk corridors as a government "bailout."
The insurers, some of whom were driven out of business, later filed claims in federal court that totaled $12 billion.
A U.S. court of claims ruled for the insurers, but a federal appeals court reversed that decision and said Congress had the final word on whether to appropriate money to pay for earlier promises.
"Although we agree with (health insurer) Moda that Section 1342 obligated the government to pay the full amount of risk corridors payments according to the formula it set forth," the appeals court said, "we hold that the riders on the relevant appropriations effected a suspension of that obligation for each of the relevant years."
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During Tuesday's argument, lawyers clashed over whether a law passed by one Congress could be binding on appropriators of the next.