SCOTUS upholds ‘Obamacare’ risk corridor payments to insurers

There are two cases currently before the U.S. Supreme Court that represent Republican efforts to sabotage the Affordable Care Act aka “Obamacare.”

Today the U.S. Supreme Court overwhelmingly rejected that Republican effort in the lesser of the two cases, which I believe it is fair to read, in light of tens of thousands of Americans currently dying from the coronavirus pandemic, that the court is not going to strike down the Affordable Care Act in its entirety in the more critical case next term.

Ian Milhiser reports at Vox, A Republican effort to sabotage Obamacare was just rejected by the Supreme Court:

On Monday, the Supreme Court voted 8-1 to reject a Republican effort to sabotage parts of the Affordable Care Act. The upshot of this decision is that health insurers will receive payments owed to them under Obamacare’s “risk corridor” program.

Justice Sonia Sotomayor’s majority opinion in Maine Community Health Options v. United States, relies on “a principle as old as the Nation itself,” according to the opinion. That principle: “The Government should honor its obligations.”

The vote in Maine Community was not close. Eight justices joined all or nearly all of Sotomayor’s opinion, leaving Justice Samuel “not true” Alito in a lonely dissent. That’s a bit of a surprising outcome given what was at stake in the case, which involved a $12 billion Republican scheme to sabotage Obamacare.

And yet, after years of litigation seeking to destroy the Affordable Care Act, and after many more years of partisan rancor bitterly dividing the two major political parties on whether Obamacare should continue to exist, only Justice Alito was willing to endorse this particular effort to undercut President Obama’s primary legislative accomplishment.

The other eight justices all agreed that the risk corridors program should be preserved.

When you’ve lost even conservative activist Justice Clarence Thomas, you have really lost.

Risk corridors are one enticement that the Affordable Care Act provides to bring these reluctant insurers into the Obamacare exchanges. Under this program, insurers that set their premiums too high paid a percentage of their excess profits to the government. And insurers who set their premiums too low are reimbursed a percentage of their losses. That way, insurers enjoy some cushion against catastrophic loss if they set premiums too low.

The risk corridors were a temporary program, which expired after 2016. But many insurers that were entitled to payments under the risk corridor program never received those payments — to the tune of about $12 billion — largely due to a Republican effort to undermine the program.

Beginning in 2013, Sen. Marco Rubio (R-FL) began pushing for legislation to end the risk corridor payments. Eventually, Congress enacted a provision in its appropriations bills for 2014, 2015, and 2016 — known as a “rider” — seeking to prevent the federal government from making most of the payments it owes under the risk corridors program. The core issue in Maine Community is whether this rider actually cut off these payments.

To understand why the rider did not successfully cut off the risk corridor payments and why the Supreme Court sided with the insurers in Maine Community, it’s useful to dig into the text of the Affordable Care Act itself, and the text of the riders.

The Affordable Care Act’s language governing the risk corridors is written in mandatory terms. It states that the government “shall pay” a fraction of the costs of insurers that qualify for relief under the risk corridor program. “Shall” is a strong word. It suggests that the government must do the thing that Congress has instructed it to do.

Moreover, as Sotomayor writes, Obamacare creates something very akin to a contract between insurers and the federal government. The Affordable Care Act “imposed a legal duty of the United States that could mature into a legal liability through the insurers’ actions—namely, their participating in the healthcare exchanges.”

That is, insurers were told that they would be entitled to benefit from the risk corridor program if they agreed to sell plans on the Obamacare exchanges. If the government were to back out of this arrangement after an insurer upheld its part of the bargain, it would not honor its legal obligation.

But what of the rider? That provision, which was attached to appropriations bills laying out much of the federal government’s spending appropriations for 2014-2016, provides that “none of the funds made available by this Act” from certain health care-related appropriations “may be used for payments under section 1342(b)(1) of Public Law 111–148 (relating to risk corridors).”

The key words here are “by this Act.” Though the rider prohibits money appropriated under these specific spending bills from being used to fund risk corridors, it does not prevent the government from making these payments from a different source of funds. And, as it turns out, there is another source of funds that the government can use to make the risk corridor payments — the “Judgment Fund,” which “pays court judgments and compromise settlements of lawsuits against the government.”

Much of Sotomayor’s opinion focuses on prior precedents establishing that courts should be very reluctant to read one federal law as implicitly eliminating an obligation laid out by another law. “Repeals by implication are not favored,” Sotomayor writes, quoting from a 1974 Supreme Court decision. When confronted with two laws that seem to pull in different directions, courts should “‘regard each as effective’—unless Congress’ intention to repeal is ‘clear and manifest.’”

Thus, because it is possible to read the rider narrowly, to still preserve the government’s original obligations under the risk corridor program, that rider should be read narrowly. The risk corridor program survives.

Are the Obamacare wars finally coming to a close?

If this case involved any other law, it would be unremarkable. Sotomayor’s opinion is a straightforward application of longstanding precedent, and a fairly uncontroversial one at that. Nearly every member of the Court, after all, agreed with her.

But the Maine Community case is significant because it involved the Affordable Care Act. The history of Obamacare has, to a large extent, been the story of Republican lawyers coming up with ways to challenge the law in court that are widely dismissed as ridiculous — right up until those lawyers start to prevail before sympathetic [conservative activist] federal judges. The Maine Communityopinion suggests, however, that most of the Supreme Court is fully capable of separating their personal political views from what the law requires in an Obamacare-related case.

The big test of whether the judicial Obamacare wars are coming to a close, however, will come when the Supreme Court hears California v. Texas next fall. That case asks the courts to repeal Obamacare under a legal theory [non-severabillity] that is rejected even by many leading conservative scholars and other opponents of the Affordable Care Act.

If the justices approach the California case with the same wholly legal approach they took in the Maine Community case, this latest attack on Obamacare will also be rejected by a lopsided vote.

Or to play devil’s advocate, the Supreme Court could blow up “Obamacare” to drop a turd in the punch bowl of the newly elected Democratic president, and Democratic House and Senate, as revenge for defeating Republicans in 2020, just to keep the “Obamacare” wars alive. Nothing would surprise me anymore.