Congress Ended the Obamacare Insurance-Company Bailout; the Supreme Court Shouldn’t Revive it

Oct 30, 2019 by AFP

A group of health insurance companies believes Congress owes them hundreds of millions of taxpayer dollars — and won’t take “no” for an answer.

Under President Barack Obama, some insurance companies decided to offer plans on Affordable Care Act exchanges despite facing extreme risk. To no one’s surprise, the insurance companies eventually incurred losses under this bad program.

They did all this with the expectation that the government would bail them out. But the new Congress, ultimately backed by the president, refused to let taxpayers foot the bill.

So, the companies asked the courts to step in.

Only Congress can tax and spend

Last year, the U.S. Court of Appeals for the Federal Circuit held that it is solely within Congress’ power to decide whether to pay the bailout, and the judiciary should play no part. Not willing to accept that ruling, the insurance companies appealed to the U.S. Supreme Court, which took the case.

Americans for Prosperity has filed an amicus brief, supporting Congress and arguing the Supreme Court must preserve Congress’ exclusive authority to tax and spend and not allow the judicial or executive branches to overstep their bounds.

There’s good reason the power to tax and spend is held by only Congress: Taxpayers can easily hold them accountable. If lawmakers hike taxes or spend recklessly, citizens can vote them out of office. This safeguard is the public’s say in what happens to their hard-earned money. It’s no wonder the electorate chose a new Congress in 2012, based largely on its commitment to undo Obamacare.

Worth the risk?

One Obamacare program, called “risk corridors,” claimed to allow insurance companies to “share risk” when selling health insurance on the exchanges. Companies that reaped windfall profits from selling to low-risk individuals (healthy people who were less likely to use insurance) would pay money to the government, which would then use that money to cover the losses of companies that sold to high-risk individuals.

But the problem was that the Obama administration decided to let many low-risk individuals stay on their old insurance, if only temporarily. With more high-risk people than low-risk people on exchanges, it was clear there would be more losses than windfall profits.

Despite this, insurance companies decided to stay in the exchanges and take those losses because the administration repeatedly assured them that the government would bail them out.

When the new Congress convened, it decided to defund this program and not bail out the insurance companies — through legislation signed by President Obama.

The Supreme Court should uphold the Constitution

Even though it was Congress’s right to end the bailouts, these insurance companies still believe they are entitled to them.

But that’s not how the Constitution works.

The earlier promises of the Obama administration cannot bind Congress to give future sums of money to private industry. And the program the insurance companies engaged in was an incentives program, not a contract.

They voluntarily decided to engage in this program, knowing full well the risks, and they alone, not the public, should bear the brunt of that decision. We urged the Supreme Court to agree.