Taxpayers Face Billions in Obamacare Judgements

In February the U.S. Court of Claims ordered the federal government to pay $214 million to a small Oregon insurer based on its participation in the Affordable Care Act, better known as Obamacare. Moda Health had enthusiastically participated in Obamacare health insurance exchanges only to nearly go out of business. They participated based on a promise by the Obama Administration that it would provide financial support under the “risk corridor program” to companies that lose money insuring unhealthy patients. Moda Health participated and lost money, but then the government refused to fully reimburse it.

Moda sued for hundreds of millions of dollars in the U.S. Court of Claims, which ruled in favor of Moda and included some harsh language against the federal government. “The Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill,” the court wrote. “Today, the Court directs the Government to fulfill that promise. After all, to say to [Moda Health], ‘The joke is on you. You shouldn’t have trusted us,’ is hardly worthy of our great government.”

But this ruling exposes the federal government to many billions of dollars in claims by larger insurance companies that had far greater losses on the socialistic Obamacare exchanges. It is hard to feel sorry for the large insurance companies. It is hard to feel sorry for the large insurance companies. They strongly supported Obamacare, which never would have passed without their backing of it. Overall, large insurance companies made a fortune on Obamacare and taxpayers should not be footing the bill for isolated losses.

Government isn’t typically bound by its own promises because policies change with every election. The Obama Administration should not be able to bind the Trump Administration – or future taxpayers – any more than someone should be bound by promises that his neighbor might make.

The court, however, found the government to be liable under a theory of agency. The court held that Obamacare created “a contractual framework,” requiring that the Secretary of HHS “shall establish” the risk corridors program and “shall pay” risk corridors payments. The result is for taxpayers to foot the bill for bad policies of the Obama Administration under Obamacare.