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Supreme Court rules for insurance companies in Obamacare lawsuit seeking billions

The decision reflects “a principle as old as the nation itself: The government should honor its obligations,” wrote Justice Sonia Sotomayor.

Justice Samuel A. Alito Jr. was the lone dissenter, saying the court should not provide a “bailout” for the companies who decided to participate in the ACA’s “risk corridor” program, which has since ended.

The case had marked the Supreme Court’s fifth look at President Barack Obama’s signature domestic success. Unlike others — and another one the court will hear in the fall — it did not challenge the law’s underpinnings.

The question instead was whether Congress had encouraged insurance companies into offering the kinds of policies that were instrumental to making the ACA work, and then reneged on a pledge to share the cost.

For three years starting in 2014, the law said that if insurers had higher-than-expected costs, the government would reimburse a portion. Conversely, the companies had to pay into the fund any unexpected savings.

Expenses overwhelmed savings. For instance, insurers paid $362 million into the fund the first year, but others claimed reimbursable expenses of $2.87 billion.

By the time the program ended, insurers said they were owed $12 billion.

But congressional Republicans, no friends to Obamacare, mandated that the payments to insurance companies had to come from the savings, so as to be revenue-neutral. They prohibited the Department of Health and Human Services from using any other resources for the payments, and both the Obama and Trump administrations had defended that decision.

But it seemed clear at oral arguments in December that the justices disagreed.

Justice Stephen G. Breyer said he was reminded of law school. “Day one of ‘contracts,’ ” he told the government’s lawyer. “So why does the government not have to pay its contracts, just like anybody else?”

In her opinion, Sotomayor said Congress “created a rare money-mandating obligation requiring the federal government to make payments.” It cannot escape the promise simply by not appropriating enough money to cover the commitment, she said.

The companies “may seek to collect payment through a damages action in the Court of Federal Claims,” she wrote.

Alito disagreed that federal law provided an avenue for the companies to seek damages.

Instead, he wrote, the decision has the effect of “providing a massive bailout for insurance companies that took a calculated risk and lost. These companies chose to participate in an Affordable Care Act program that they thought would be profitable.”

The decision involved several cases, including Maine Community Health Options v. United States.

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