Appellate court rules that federal government not liable for risk corridor program

A federal appellate court recently ruled that the federal government does not need to pay payments originally outlined as part of the Affordable Care Act's risk corridor program. The risk corridor program was to help mitigate the risk that an insurer would attract a disproportionate number of patients whose healthcare required higher medical costs. The original idea was that the federal government would contribute billions of dollars in the initial rollout of the Affordable Care Act. However, there were questions as to whether the funds were properly authorized and the current administration has declined to pay beyond what was collected from other insurers. Modern Healthcare published an informative background article in 2017.

Politico reported that a divided appellate ruled that insurers should not expect the federal government to pay what was originally planned in the Affordable Care Act, given that subsequent legislation required that the risk corridor payments not require any government funding. This seems like it would be a substantial disappointment for insurers that priced their premiums expecting that the government would subsidize some amount.