The Independent View: Trump Stiffed Health Insurance Contractors

The Contract Insurance Carriers sign when they offer Policies on the ACA Exchanges is to Cover a Chunk of Low-Income Enrollee Deductibles, Co-Pays, and other Out-of-pocket Costs, which would normally be the Enrollees' Responsibility. These are called Cost Sharing Reductions (CSR). The Carriers then Submit their CSR Invoices to the Federal Government, which is supposed to Reimburse the Insurance Carriers every month.

President Trump Cut Off Contractually-required CSR Reimbursement Payments to Insurance Carriers in October 2017, and hasn't made any Payments since. That means Insurance Carriers were effectively Stiffed for October, November, and December CSR Payments in 2017, totaling upwards of $2 Billion or so collectively. They were also Stiffed out of 2018 CSR Reimbursements as well, but they put their heads together with the Insurance Regulators and came up with the clever Silver Loading and Silver Switching Workarounds to make up their Losses. However, Silver Loading Switching didn't do anything to make up their Losses for the last Three Months of 2017.

Not every Insurance Carrier is a Multi-Billion Dollar Corporate behemoth; there are some Small Guys who got hurt by this as well, and some Carriers Large and Small are Non-Profit or at least Not-for-Profit. The vast Majority of the Half Million or so who work Directly for Insurance Carriers are Regular Folks working Regular Jobs and earning Regular Incomes.

So a bunch of the Insurance Carriers Sued the Federal Government to get the Money they're still owed from Q4 2017, and so far they appear to be Winning

One just scored the First Victory. The U.S. Court of Federal Claims ruled in Favor of Montana Health Co-Op, which Sued $5.3 Million in Unpaid CSR Payments, finding that the Government Violated its Obligation under the ACA when it Stopped Paying the CSRs in October 2017 and many of these Cases are now Resolved

These Lawsuits began as early as November 2017 when Common Ground Healthcare Cooperative, an Insurer based in Wisconsin, amended its Class Action Lawsuit on Risk Corridor Payments to additionally Contest the Government’s Failure to make CSR Payments. This was followed by separate Challenges from Several other Insurers.

To date, Two Insurers, Maine Community Health Options and Sanford Health Plan have Succeeded in their Challenges. The Federal Government intends to Appeal both Cases to the Federal Circuit, and the Cases will likely be Consolidated on Appeal. As of September 2018, 91 Insurers had Opted-In to the Class Action Lawsuit. Judge Margaret M. Sweeney has Scheduled an Oral Argument in this Case, alongside the Challenges brought by Maine Community Health Options and Community Health Choice, for January 29th.

Judge Thomas C. Wheeler will also heard Oral Argument over a Challenge brought by the L.A. Health Care Plan on January 4th.

Other Lawsuits, such as those brought by Health Alliance Medical Plans and Blue Cross Blue Shield of Vermont, are proceeding and awaiting additional Briefing or a Hearing. At the same time, New Lawsuits continue to be filed. Guidewell Mutual Holding Corporation, which includes Blue Cross and Blue Shield of Florida, Florida Health Care Plan, and Health Options, filed a CSR Lawsuit on November 20th, seeking a Total of about $223 Million for Unpaid CSRs from 2015, 2016, and 2017.

Harvard Pilgrim Health Care, based in Massachusetts, filed a much Smaller Lawsuit on November 27th for Unpaid CSRs from 2017.

A significant Challenge brought by Molina for nearly $160 Million remains Stayed by Judge Wheeler; both Parties requested the Stay until after a Final, Non-Appealable Judgment is issued in Moda Health Plan. This means the Molina Case will Not Proceed until after the Supreme Court decides whether to hear Moda Health Plan, or Issues a Decision if it takes the Case.

The point is that President Trump promised to Run the Federal Government the way he ran his Businesses, and it appears that this is One Promise that he's actually keeping: Stiffing Contractors out of Money they're Contractually Owed, forcing them to turn to Costly Litigation to get Paid.