Government Ordered to Reimburse an Insurer Because the GOP Screwed Them

Written by SK Ashby

Congressional Republicans recently decided that so-called Obamacare "bail outs" are actually a good thing now that they're solely responsible for what happens to the healthcare industry, but there was a time not very long ago when they railed against it.

More than that, they also passed legislation that partially defunded that mechanism of Obamacare, an action that had consequences the federal government has now been ordered to pay for.

Although Medicare Part D had been a Republican program, this time around the GOP railed against the same risk corridor arrangement as a “bailout” of insurers. They inserted a provision in a 2014 spending bill forbidding Health and Human Services from using any money other than what came from profitable insurers. As it happened, the program ran deeply in the red. The accumulated losses for 2014 and 2015 alone are up to $8.3 billion; some estimates place the total owed over the three years at nearly $15 billion.

Because it’s hamstrung to pay the full claims, Health and Human Services has paid out only 12.6% of all claims for 2014, and nothing so far for 2015 or 2016. Moda’s lawsuit claimed that it’s due $214 million. It argued that the government essentially promised that the money would be paid, and that promise can’t be nullified just because Congress decided to tamper with where the money came from.

Judge Thomas C. Wheeler ruled in favor of Oregon's Moda Health insurer and said there's "no dispute" that the federal government is liable for not covering a program it promised to cover.

It strikes me that if an insurer can win a case against the federal government over this relatively small amount of money, there could be significant legal challenges to any effort to fully repeal Obamacare without adequately replacing it.

And the stakes would obviously be far more significant in that event. Entire states, particularly those who chose to expand Medicaid, the cost of which is almost entirely covered by the federal government, could pursue legal action against the federal government. Individual insurers and healthcare providers could also take legal action against states and the federal government. In some cases, that may be their only chance for survival as Medicaid expansion literally saved some regional healthcare providers and hospitals from closing.

I can scarcely envision the legal nightmare that could be unleashed by kicking 20 to 30 million people off their healthcare in a system that is fully embedded into the entire healthcare industry and state economies. The economic damage could be as incalculable as the human toll.