Health Insurers Hopeful of Supreme Court Victory

Health Insurers Hopeful of Supreme Court Victory

The health insurance industry hasn’t had much luck in challenging Obamacare, with four previous challenges to the controversial law being struck down by Supreme Court justices. However a fifth challenge was heard by the court Tuesday, and this time it looks like the insurers might have luck on their side. Is that good news? Maybe not, if you’re a taxpayer.


When Barack Obama tried to revolutionize health care in the US he stirred up plenty of controversies. From the government’s right to force people to pay for insurance, down to whether businesses were obliged to pay for birth control that went against their religious beliefs, everyone could find something to argue about. In the middle of it all were the insurance companies, who were suddenly told they had to offer coverage to millions of new — often unwilling — customers.

  • The current debate is about whether the government is obliged to make payments to insurers under a deal agreed to by the Obama administration in 2010. The companies say it is; the administration says it isn’t, because there was never a formal contract and Congress let funding lapse in 2016.
  • When Obamacare was introduced, the administration sweetened the deal for insurers by offering them “risk corridor” payments. The companies were told that if the new customers they were forced to take on under Obamacare turned out to be more expensive than expected, the government would make up a portion of their losses. On the other hand, if the customers were less costly and the companies made more profit, they would turn a share over to the government.
  • To nobody’s surprise, the customers turned out to cost more, and deficits in the program quickly rose. In 2016, it came up for renewal thanks to a built-in sunset clause, and Congress decided to let it lapse.
  • Now the insurers say they’re entitled to another $12 billion in government funding. The administration says funding was stopped by Congress and that’s that.
  • This case has created the unusual sight of liberal justices arguing for government subsidies to private businesses, and conservative ones saying that a contract — albeit an unwritten one — can be ignored. One big fact on the conservative side, though, is that if the government really was guaranteeing payments it would have set up an appropriations mechanism at the time — and it didn’t.
  • The Trump administration has taken a less socialist approach to the problem by eliminating tax penalties for Americans who don’t buy insurance, so the problem has largely gone away. However, it seems likely the Supreme Court will opt to make one last big payment just to calm things down.

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