The
Patient Protection and Affordable Care Act (ACA), also known as "Obamacare", passed as law in 2010. Part of the law established a healthcare plan marketplace where consumers could shop for and select individual plans. Because this was a rather new concept, drawing in new insurers alongside well-established ones, and considered to be potentially risky, the ACA included a
Risk Corridor program, described at to limit the amount of profit or losses any single healthcare plan could make or lose during the first three years of implementation of the ACA, from 2014 through 2016. Based on calculations set by the
Department of Health and Human Services (DHHS), profitable healthcare plans would pay a portion of those profits to the Centers for Medicare and Medicaid Service (CMS), and subsequently the CMS would pay to cover a portion of the losses to the unprofitable plans. The amounts that plans were to pay or were to be covered by the government were based on percentage differentials of expected versus actual medical costs, and did not cover all gains or losses by insurers, leaving those that were drastically under-performing still responsible for their losses. Conceptually, the idea was that by the end of 2016, healthcare plans would have enough data from three years of operations to be able to minimize risk and thus should not have significant losses or profit. The
Republican Party had generally been against the ACA, and with the
2014 United States elections, gained controlled of the Senate while retaining control of the House of Representatives. Senator
Marco Rubio introduced legislation in November 2013 to amend the ACA to repeal the Risk Corridor program, which he had described as "taxpayer-funded bailouts", but which failed to pass. Rubio was able to successfully able to introduce a
rider into the 2014
appropriations for the DHHS that prevented CMS from using other accounts to fund payments for the Risk Corridors program, effectively requiring it to be fiscally neutral. In tallying the 2014 year-end funds, CMS found they had an approximate deficit in payments to under-performing insurers due to the new rider. CMS were forced to reduce payments that year on a
pro rata basis, approximately down to 12.6% of the originally promised payments, with the expectation to pay the remaining owed funds from the profitable plan payments in 2015 and 2016. A similar rider was introduced in the subsequent 2015 appropriations bill to limit the funds the CMS could use to pay out insurers, and with 2015 also having another large deficit towards underperforming insurers, CMS could issue no 2015 payments and only cover a portion of the owed 2014 payments. A similar situation occurred in 2016, with yet another rider and another deficit. By the end of 2016, CMS estimated it still owed insurers over from the Risk Corridor program. Some of the insurers that were owed money by the CMS sued the government for failure to pay. The Supreme Court case here is a consolidation of three cases from four different insurers: Maine Community Health Options,
Moda Health Plan,
Blue Cross and Blue Shield of North Carolina, and the Land Of Lincoln Mutual Health Insurance Company. All four had filed separate suits at the
United States Court of Federal Claims under the
Tucker Act, asserting that §1342 of the ACA held the government responsible to fulfill the payments promised by the Risk Corridor program. Of the four cases, only Moda Health had been given partial summary judgement that the government was still required to fulfill payments. All four cases were appealed to the
United States Court of Appeals for the Federal Circuit which ruled in favor of the government in all three cases, in that the riders of the appropriation bills eliminated the responsibility of the government to fulfill the payments. ==Supreme Court==