Pressure builds on $73M ObamaCare funding case as others wait

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This story previously appeared in The Hill Extra. 

Anticipation is swirling around a case involving funding for an Illinois ObamaCare co-op as the Department of Justice (DOJ) seeks to delay a number of similar cases with other insurers. 

Land of Lincoln’s $73 million lawsuit was an early win for the administration when a federal judge dismissed it last week, and now the DOJ is pushing to hold off on other cases until Land of Lincoln’s appeal is resolved. Republican lawmakers have termed the “risk corridor” funding — designed to help soften the financial blow of insuring sicker members — a “bailout” for insurance companies, and have introduced legislation to block any potential settlements.

Sens. Ben Sasse (R-Neb.), Marco Rubio (R-Fla.), John Barrasso (R-Wyo.) and Mike Lee (R-Utah) on Thursday introduced S. 3481, the HHS Slush Fund Elimination Act, to prevent the DOJ from paying the insurers through the Treasury Department’s Judgment Fund by settling the cases. Rep. Morgan Griffith (R-Va.) introduced a similar measure, H.R. 6339, the same day.

At least 11 insurers are suing the administration over risk corridor funding. The administration owes $2.87 billion to the companies through the three-year program, but claims it isn’t obligated to pay the insurers on an annual basis. 

The program was originally intended to be budget-neutral, and Republicans blocked the Centers for Medicare and Medicaid Services from allocating other funds when the agency came up short on cash. The GOP has lambasted the ObamaCare program, even though they previously supported it as part of the Medicare Part D program.

Two other cases — New Mexico Health Connections and Boston-based Minuteman Health — are on hold until March 2017. The two co-ops sought a stay in the cases themselves.

But that changed once Judge Charles Lettow ruled in favor of the administration Nov. 10. Since then, the DOJ has filed motions to stay in suits with Oregon-based Moda Health and Montana Health co-op. In another dispute, with Maine Community Health Options — in which the DOJ sought a stay before Land of Lincoln’s ruling — the insurer filed a motion fighting the DOJ’s attempt to postpone a decision.

“It was very definitive,” Chris Jacobs, founder of Juniper Research Group and former staffer for Vice President-elect Mike Pence, said of the Land of Lincoln ruling. “It wasn’t even that the claims were not right, it was denied on all counts on the merits. Thirty-six pages single-spaced argument definitely undermines the insurer’s case and weakens CMS and those within the administration that want to settle.”

Jacobs pointed out that the incoming Trump administration has a close tie to risk corridors — Jared Kushner’s brother Josh is one of the founders of Oscar Health, which has suffered a $128 million loss so far this year. Democratic outcry against nepotism within the Trump administration could prompt them to sign on to anti-settlement legislation, he said. 

Oscar Health released a statement Thursday saying the government has not fully funded the risk corridors.

“Doing so could have prevented the plan withdrawals that have so destabilized the market,” Josh Kushner wrote with co-founder Mario Schlosser. “Because of these and other flaws, insurers have had to establish product prices before there was any reliable information on which to do so. Any new government would have had to address these shortcomings.”

Tim Jost, an emeritus law professor with Washington and Lee University, said Land of Lincoln’s ruling could have ripple effects on the other cases.

“Judge Lettow’s decision is not binding, as far as I know, on the other Court of Claims judges before whom other risk corridor cases are pending. But it is a long and well-reasoned decision and is likely to persuade other judges,” he wrote in a blog post for Health Affairs.

“In the end, however, the opinion only concludes that no risk corridor payments are currently owing, and leaves open, at least a little, whether any payments will be due at the conclusion of the program (a question HHS has left open as well.)”

Jacobs thinks the resolution in Land of Lincoln could have a stronger impact away from the bench.

“It will have more of an impact in terms of the way that federal policymakers handle this, in terms of whether negotiations accelerate on a potential settlement, whether it accelerate or taper off,” Jacobs said. “It will have an impact in terms of what Congress does to prohibit a judgment fund bailout.”

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Tags Illinois John Barrasso Marco Rubio Mike Lee Mike Pence Morgan Griffith ObamaCare

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