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Saturday, May 25, 2024 | Back issues
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Obamacare Funding Lapse Sends Insurer to Court

WASHINGTON (CN) — Blue Cross of Idaho is taking the U.S. government to court for stiffing it on payments meant to offer stability while insurers adapt to changes in the market wrought by health care reform.

Congress created the risk-corridor program as part of the Patient Protection and Affordable Care Act to help insurers that were struggling to set premiums in a new market flooded with millions of new customers about whom companies had little to no information.

Under the temporary program, meant to run from 2014 through 2016, the government is supposed to collect funds from insurers doing well, and make payments from that pool to those that are not.

Funds owed to floundering insurers far surpassed what was collected though, and Congress put risk-corridor funding in jeopardy with the passage of an appropriations act in December 2014.

Filing suit this week in the U.S. Court of Federal Claims, Blue Cross claims that government paid just 12.6 percent of the risk-corridor funds it owed in 2014 and has already said it won't hand out any for the 2015 calendar year, an anticipatory breach of the contract.

The Oct. 24 complaint says the maneuver has left insurers in the dark on how much money they can expect from the program.

"The government has thus left BCI, and other QHPs owes past-due risk corridors payments, to guess when - if ever - the United States will make the full [calendar year] 2014 and [calendar year] 2015 risk corridors payments owed to plaintiff," Blue Cross of Idaho says.

BCI contends nothing in the health care law requires the risk corridors program to be budget neutral.

BCI seeks at least $79 million in damages in the complaint - the amount of risk corridors payments it says the government owes from 2014 and 2015.

It alleges breach of contract and anticipatory breach of contract against the government.

The suit was filed the same day as the Obama administration announced that premiums would jump up 22 percent for 2017, the latest in a string of bad news for the president's signature health care law.

Monday's lawsuit comes roughly a month after similar claims by New Mexico Health Connections.

Illinois insurer Land of Lincoln Health also blamed 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.

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