By Guy Boulton, Milwaukee Journal Sentinel.
NOTE: It is clear to me that health insurers will never be satisfied with the amount of money they have. They ask for more money with promises of lowering premiums, and then find reasons to raise premiums when they get it. That is because private health insurers are financial tools. Their purpose is to make money for investors. They do that by charging high premiums, shifting the cost of care onto enrollees through copays and deductibles and then restricting where people can receive care and what they can get. It is sad to see cooperatives, which represented a different way of insuring people, but were of course prevented from succeeding by cuts to funding and having to operate in a toxic for-profit environment, joining forces with private insurers against the government. We need to cut these middle entities out – health insurers are not needed. Health care is a public good, not a commodity. We can provide more care to more people using the money we save when we move to a single payer healthcare system. – Margaret Flowers
Common Ground Healthcare Cooperative expected to receive $45 million in 2015 through a program in the Affordable Care Act to help offset the risk health insurers faced in a new market.
The Wisconsin cooperative instead received $5.7 million.
Common Ground Healthcare, based in Brookfield, now is among more than 100 health insurers who contend that the federal government owes them billions of dollars for reneging on commitments made as part of the Affordable Care Act.
“Where else do you enter into an agreement with another entity and then break that agreement midstream and not have any recourse?” said Cathy Mahaffey, chief executive officer of Common Ground Healthcare. “And this has happened to us time and time again with the Affordable Care Act.”
The cooperative is the lead plaintiff in a class-action lawsuit involving the payments. The lawsuit — one of several stemming from the issue — includes 116 health insurers.
The plaintiffs include affiliates of some of the country’s largest insurers, such as UnitedHealthcare, as well as Wisconsin insurers, such as Dean Health Plan, Security Health Plan and Network Health Plan.
The steps taken by the federal government — in one case, by Congress; in another, by the Trump administration — after the Affordable Care Act was passed partially explain why health insurers abandoned the market for selling health insurance to individuals and families who don’t receive health benefits through an employer.
They also partially explain why premiums for those health plans have soared and made health insurance unaffordable for most middle-class people who are not eligible for federal subsidies through the law.
The health insurers were dealt a setback this month when an appellate court overturned a ruling in favor of a health insurer who had filed a similar lawsuit.
The insurer is almost certain to appeal the ruling.
The lawsuits are just one example of how the battles over the Affordable Care Act continue to be fought in the courts more than eight years after it became law.
Wisconsin is among the 20 states, for instance, that have filed a lawsuit in Texas to have the law declared unconstitutional.
The lawsuits filed by Common Ground Healthcare and other health insurers stem from one of the provisions in the Affordable Care Act designed to lessen the initial risk that insurers would take on by selling health plans on the new marketplaces.
The law remade the market for health insurance sold to people who don’t get coverage through an employer or a government health plan.
It barred health insurers from denying coverage if someone had a pre-existing health condition or charging him or her higher rates. It also limited how much premiums could vary based on age. And it prevented insurers from charging women more than men for the same coverage.
The changes forced insurers essentially to guess how to price their health plans.
The insurers had no experience in insuring people with pre-existing health problems. Nor did they know how many people would sign up for coverage or what their medical bills would be.
To lessen the uncertainty and encourage insurers to participate in the new market, the Affordable Care Act set up three programs to help get insurers through the rocky first years until they knew more about the market and how to price their health plans.
One of the programs — known as the risk corridor program — required the federal government to partially offset insurers’ losses by health insurers if the people who bought health plans required more care than projected.
The program would run from 2014 through 2016, and the payments would come from two funds for the Medicare program.
Health insurers also would be required to pay the federal government a percentage of any profits if their medical claims were less than projected.
The first payments were due in 2015.
But in December 2014, almost a full year after health insurers had been selling health plans on the marketplaces, Congress passed an appropriations rider that prohibited the federal government from paying out more in the risk corridor program than it collected.
The rider also prohibited the federal government from using money from other programs for the payments, Katie Keith, an expert on the Affordable Care Act, wrote in a blog post on the website of Health Affairs, a policy journal.
Identical riders were included in appropriations legislation and continuing resolutions for 2016 and 2017.
Health insurers incurred $12.6 billion in losses from 2014 through 2016 that were eligible for payments through the risk corridor program, but more than $12 billion of those payments were not paid, according to the lawsuit in which Common Ground Healthcare is the lead plaintiff.
The cooperative, for instance, estimates that it is owed more than $100 million in risk corridor payments.
“It would have significantly changed our financial picture,” said Mahaffey.
The key issue in the lawsuit is whether an obligation of the government in a statute later can be eliminated through an appropriations bill, said Stephen Swedlow, a managing partner with Quinn Emanuel Urquhart & Sullivan and the lead attorney in two of the class action lawsuits filed by the health insurers.
“What the case will ultimately affirm is that when Congress passes a statute, it can’t change its mind through appropriations bills,” Swedlow said. “If the government wants to change the government program, it has to change the government program.”
The Court of Appeals for the Federal Circuit in Washington, D.C., by a 2-1 majority, disagreed, overturning a decision by the Court of Federal Claims in favor of an insurer.
The court agreed that the provision in the Affordable Care Act obligated the government to make the full risk corridor payments, Keith wrote in a blog on the ruling. But it concluded that the obligation was suspended by the subsequent appropriation riders.
The insurer — Moda Health Plan, which sold plans in Oregon, Alaska and Washington — can ask for a rehearing by the entire Federal Circuit or appeal to the Supreme Court.
“Given the stakes, Moda is likely to persevere, setting up another potential blockbuster Supreme Court ruling on the ACA,” Keith wrote.
By then, the makeup of the court will be different with the retirement of Justice Anthony Kennedy.
Common Ground Healthcare’s lawsuit and another class action lawsuit have been on hold until the appellate court ruled.
But the appellate court’s ruling could strengthen an additional claim in the lawsuit in which the cooperative is the lead plaintiff.
The lawsuit was amended in November to include so-called cost-sharing reduction subsidies that the federal government stopped paying that month.
The cost-sharing reduction subsidies reduce deductibles and other out-of-pocket expenses for people with low incomes who buy health plans on the marketplaces set up by the Affordable Care Act.
Health insurers are required by law to provide the additional coverage. But the Trump administration stopped making the payments late last year.
“It was just money lost,” Mahaffey said.
Common Ground Healthcare, which couldn’t change its rates, estimates that it is owed $12 million to $13 million in cost-sharing reduction subsidies for last year.
“Otherwise, we would have had a break-even year,” Mahaffey said.
The cooperative estimates that it could be owed $60 million for this year.
Other insurers now have until Aug. 13 to opt-in to the class-action lawsuit for the additional claim.
Swedlow estimates that the claim involving the cost-sharing reduction subsidies could total more than $3 billion.
The amount also increases each month.
The appellate court’s ruling strengthens the lawsuit, Swedlow said, because Congress never cut off funding for the subsidies in an appropriation bill.
“A decision was made simply to stop making the payments,” he said.
The lawsuits will take years to resolve. But they make clear the challenges that health insurers have faced and how the changes have raised the cost of health plans sold to individuals and families.
“It makes participating in this market more risky, because we can never count on what the rules will be, and therefore have to price that into our product,” said Marty Anderson, chief marketing officer at Security Health Plan, an affiliate of Marshfield Clinic Health System.
The changes that led to the lawsuits — as well as other changes since the Affordable Care Act — also have been more than a little frustrating for health insurers.
“No one,” Mahaffey said, “does business this way.”