Insurer Blasts ‘Absurdity’ of Obamacare Funding

     (CN) — Claiming it’s due $23 million under the federal health care law, a struggling New Mexico health insurer has hauled the United States into court for its “absurdity.”
     New Mexico Health Connections says the safety-net funds for 2014 and 2015 are promised under the risk-corridor program of the Patient Protection and Affordable Care Act.
     The temporary three-year program collects funds from insurers doing well, and makes payments from that pool to those that are not.
     Officials created the program to mitigate the risk of covering the wave of new customers with unknown health care needs as required by the Affordable Care Act.
     NMHC filed its suit Monday in the U.S. Court of Federal Claims. It says funding shortfalls have kept its payments at bay, but that the government “has dug the hole deeper” by holding it to other burdensome requirements of “Obamacare.”
     The Affordable Care Act’s risk-adjustment program requires NMHC “to timely pay every cent of its obligation … without giving NMHC any credit or offset for the amount owed to NMHC by the government,” the complaint states.
     “The government is taking the duplicitous position that NMHC must fully and timely satisfy its obligation while the government can simply ignore its own obligation,” it continues.
     NMHC’s 42-page lawsuit is brimming with insults over “the absurdity of the government’s position.”
     Barak Bassman, an attorney for the insurer with Pepper Hamilton, drew a hypothetical in which two men named Andy and Newman owe each other money, with the one who owes more refusing to pay yet still demanding money from the other.
     “Despite its obvious lack of merit, this is precisely the position the government has taken with NMHC,” the complaint states. “But, rather than $50, millions of dollars are at stake.” (Emphasis in original.)
     An act passed by Congress in 2014 limited risk-corridor payments to a percentage of whatever was collected. That same year the program saw a $2.5 billion deficit, just 12.6 percent of the amount owed to insurers across the country.
     Illinois insurer Land of Lincoln Health blames the funding shortfall for its demise, claiming a loss of over $80 million in risk-corridor payments. The company owes $31.8 million to the risk-adjustment program.
     The state’s acting director of insurance shut the LLH down in July via rehabilitation proceedings a month after it sued the federal government for its funding.
     Other insurers, such as Blue Cross Blue Shield of North Carolina and Highmark Health, have also recently sued for the millions they are missing.
     NMHC, based in Albuquerque, was created under the Consumer Operated and Oriented Plan program of the Affordable Care Act, meant to foster competition with larger entrenched insurance companies and lower costs.
     Its member base has grown from 14,000 to 44,500 in the last two years, almost half of whom qualify for subsidized premiums.
     NMHC says it set low premiums as part of its goal of providing health insurance to everyone, relying on the risk corridor program to do so.
     “NMHC has stayed true to its mission and to the goals of the ACA, expanding health care coverage by providing quality options at affordable rates,” the complaint adds.
     Justice Department spokesman Nicole Navas declined to comment beyond the government’s filings in pending Affordable Care Act litigation, pointing to two motions to dismiss lawsuits by other insurers.
     Pepper Hamilton, the firm representing NMHC, is based in Philadelphia.
     On the heels of NMHC’s lawsuit, the Government Accountability Office published a report Thursday that says the Obama administration failed to follow the Affordable Care Act in a $5 billion dispute over compensating insurers for high costs from seriously ill patients.
     Another three-year program called “transitional reinsurance” is at issue in this report.
     The program collects fees from employer and other private health insurance plans and channels the money to health plans that face large claims for treating patients with catastrophic medical problems.
     Employers and insurers were supposed to provide $25 billion from 2014 to 2016, with $5 billion going directly to the Treasury.
     The ensuing shortage led to the Treasury Department missing this allocation, and House Republicans calling for an investigation.
     Thursday’s audit says the U.S. Department of Health and Human Services “lacks the authority to ignore the statute’s directive to deposit amounts (collected under the program) in the Treasury.”
     GAO general counsel Susan Poling called the Obama administration’s interpretation of the law “inconsistent with the plain language of the statute.”
     Some Republicans, including Sen. John Barrasso, of Wyoming, say the finding should compel officials to shutter Obamacare.

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