The Supreme Court today agreed to hear a case brought by health insurance companies claiming they are owed $12 billion by the government for unfunded Obamacare risk corridor payments.


This 1932 photo of the Supreme Court, taken by a camera smuggled into the courtroom, is one of only two known to exist. Photography in the chamber is forbidden.

Risk corridor payments were designed to compensate those insurance companies that ended up with a sicker (and therefore more expensive) population of enrollees. The money was supposed to be collected from insurers with healthier populations, but the funds never added up to enough to compensate the losers fully.

The insurance companies expected the federal government to cover the shortfall, but Congressional Republicans engineered a series of budget riders forbidding the use of general funds to compensate the insurers.

Now the insurers want the money they believe is still owed to them, some $12.3 billion in all. They claim they set their insurance premiums lower in expectation of compensation for their losses and are accusing the government of “bait-and-switch” tactics.

The Centers for Medicare and Medicaid Services (CMS) was making payments from funds collected, but in 2018 a judge ruled that that provision of the Affordable Care Act (ACA, or Obamacare) was “arbitrary and capricious.”

The Supreme Court will hear an appeal of a lower court’s decision that the insurers are not owed the money when it reconvenes in October.

This issue is completely separate from a broader challenge to the law’s constitutionality, which is being heard next month in New Orleans by the 5th U.S. Circuit Court of Appeals.