Supreme Court rules Congress must pay Obamacare insurers

The government had insisted it had no obligation to pay — which one lawyer said was "a massive government bait and switch."
Image: Pedro Rojas holds a sign directing people to an insurance company where they can sign up for the Affordable Care Act, also known as Obamacare
A sign directs people to an insurance company where they can sign up for the Affordable Care Act, also known as Obamacare, in Miami in 2015.Joe Raedle / Getty Images file

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By Pete Williams

WASHINGTON — The U.S. Supreme Court ruled on Monday that the federal government must pay a group of insurance companies that took a risk on selling coverage in Obamacare health exchanges and were promised that their losses would be covered.

By an 8-1 vote, the court said when Congress passed the Affordable Care Act, it set up programs to compensate insurance companies during the first three years for plans that turned out to be unprofitable. But when several companies sustained a total of $12 billion in losses, both the Obama and Trump administrations said because Congress didn't fully fund the reimbursement program, the government had no obligation to pay.

The court said the law clearly established a requirement, quoting a "shall pay" provision in the act.

"The Government should honor its obligations," Justice Sonia Sotomayor wrote for the court's majority. The court agreed with a lawyer for the insurance companies who said when the case was argued that the government's insistence that it had no obligation to pay amounted to "a massive government bait and switch."

The ruling was a victory for four companies that provided health care coverage in Alaska, Illinois, Maine, North Carolina, Oregon and Washington.

But the lone dissenter, Justice Samuel Alito, said the decision provides "a massive bailout for insurance companies that took a calculated risk and lost."

Monday's ruling said nothing about the constitutionality of Obamacare, which is under attack by a group of red states. The justices will hear that case, which will determine whether the program can continue, in the fall.