The Supreme Court has ruled that an attempt to sabotage the Affordable Care Act (ACA) by reneging on payments to insurers was illegal. The “risk corridors” program guaranteed payments to insurance companies that had unexpected losses during the first three years of the operation of the ACA’s online insurance exchanges. The program aimed to stabilize the market for ACA-compliant plans and ensure that sufficient insurers participated. Since 2014, however, in an effort to undercut the ACA, Congress refused to appropriate money for these risk corridor payments. The Trump administration supported the refusal.
On April 27, 2020, the Court held 8-1 that the ACA created a straightforward obligation for the government to pay insurers the full amount of their losses. Justice Sonia Sotomayor wrote that the decision reflects “a principle as old as the Nation itself: The Government should honor its obligations.” Under the Court’s holding, the government must pay the participating insurance companies $12 billion. This will not have an immediate effect on people enrolled in ACA plans; however, depending on how the money is accounted for, it may eventually result in refunds under a different provision of the ACA that returns excess profits to policyholders.
The Supreme Court is also currently considering a case brought by Texas and several other states, with support from the Trump administration, that seeks to strike down the entire ACA. As with the case decided this week, legal scholars across the ideological spectrum have criticized the legal theory of the Texas case.
The Affordable Care Act has been critical to strengthening the Medicare program and helping beneficiaries by lowering out-of-pocket costs. The Center for Medicare Advocacy supports the defenders of the ACA and remains hopeful that this latest attempt to repeal the program by judicial action will fail.
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