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U.S. Supreme Court justices on Tuesday appeared sympathetic to claims made by health insurers seeking $12 billion from the federal government under a program set up by the Obamacare law aimed at encouraging them to offer medical coverage to previously uninsured Americans. The justices considered a challenge by a group of insurers of a lower court's ruling that Congress had suspended the government's obligation to make such payments. (Hurley, 12/10)

Paul D. Clement, a lawyer for the insurance companies, said his clients had been the victims of “a massive government bait-and-switch.” But Edwin S. Kneedler, a lawyer for the federal government, said a statutory promise to cover the companies’ losses was ineffective without a separate congressional appropriation of money. “The appropriations clause of the Constitution is central to this case,” he said, referring to a provision that says, “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.” Requiring the government to pay the insurers, Mr. Kneedler said, “would impose unprecedented liability on the United States of billions of dollars.” (Liptak, 12/10)

During an hourlong oral argument Tuesday, most of the justices seemed skeptical about the Justice Department’s arguments that the government didn’t have to pay roughly $12 billion. The money wasn’t owed, the department said, because lawmakers made changes to a program under the ACA called the “risk corridors” program. The three-year program aimed to keep premiums low and limit financial risks for insurers that offered coverage on the exchanges, a critical feature of the Obama-era health law. But after the ACA was enacted, Congress in later budget years attached appropriations provisions that effectively prohibited the government from making payments under the program. (Kendall, 12/10)

Kaiser Health News: Supreme Court Seems Sympathetic To Insurers In Obamacare Case

No clear split between conservative and liberal Supreme Court justices emerged Tuesday as justices heard arguments over whether the federal government could renege on Congress’ promise to pay health insurance companies billions to motivate them to participate in the Obamacare marketplaces. (Galewitz, 12/10)

Kneedler had a harder time with the justices. He said the provision in the statute was not a contract, but a provision like any other that depends on congressional appropriations. “The insurers were not performing services for the government. They weren’t working for the government,” Kneedler said. “They weren’t furnishing goods to the government. They were participating in a market economy.” Breyer said that raised all sorts of questions. There are plenty of statutes, he said, “that say, if you do X, the government shall pay you, Mr. Veteran, Mr. Paratrooper, Mr. — you know, you name it.” Does that mean “they don’t really mean it?” Breyer asked. (Barnes, 12/10)

"Why doesn't the government have to pay?" Justice Stephen Breyer asked at one point. Breyer and Chief Justice John Roberts, among others, pointed to a risk mitigation program, written into the law, for insurers who might incur losses from 2014-2016. "You don't question that these insurance companies would not have participated," Roberts asked the government lawyer, "but for the government's promise to pay?" (De Vogue, 12/10)

Justice Brett Kavanaugh, a Trump appointee, put his finger on the dilemma at the heart of the case, laying out the wide-reaching implications for future partnerships between the federal government and the private sector, as well as potential burdens on the legislative process. “If we were to rule for you, everyone will be on notice going forward, private parties and Congress itself, that ‘shall pay’ doesn't obligate actual payments,” he said. “If we rule against you, Congress also will be on notice going forward that it needs to include ‘subject to appropriations’ kind of language in any mandatory statute.” (Kruzel, 12/10)

“Are you saying the insurers would have done the same thing without the promise to pay?” Justice Elena Kagan asked Deputy Solicitor General Edwin Kneedler. Kneedler said the health care law created a “vast new market” of customers, most of whom would qualify for subsidies. “The primary point was to encourage companies to go on the marketplace,” Kneedler said. (Sherman, 12/10)

Some of the justices were also skeptical that Congress intended to overturn the government's obligation to pay insurers when it didn't appropriate the funds because they never repealed the risk-corridor provision of the ACA, even though they had an opportunity. Congress knows how to write a law that is conditional on appropriations and it never said that the risk-corridor payments were conditional, Justices Kagan and Brett Kavanaugh said. (Brady, 12/10)

Justice Samuel Alito was the least sympathetic of the justices to the insurers’ position, and he peppered Clement with questions throughout Clement’s initial stint at the lectern. What if, Alito queried, the measures limiting the funds that were available to compensate the insurers had been included in the original legislation? Would it have made a difference? Or, Alito continued, what if the law had specifically provided that the money to reimburse the insurers would come only from the “payments in”? (Howe, 12/10)

Enacted by a Democratic-controlled Congress in 2010, the Affordable Care Act promised to partially reimburse insurers if they lost money by covering people with preexisting conditions. The law said that the government "shall" make these payments. But in 2015, Republicans, by then in control of both houses of Congress, attached riders to appropriations bills barring the use of the money for the promised payments. (Totenberg, 12/11)

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. (Savage, 12/10)

Eighteen of 24 insurance providers that joined the insurance exchanges went out of business after the government stopped making the risk corridors payments. Several others either stopped offering Affordable Care Act plans or charged significantly higher premiums. The Trump administration argues the health law's promise to pay insurers was implicitly contingent on Congress appropriating the funds. When lawmakers later chose to limit the funds, the money rightfully didn't flow, they say. (Dwyer, 12/10)