Notice & Comment

Three thoughts about stopping risk corridor settlements.

Congressional Republicans will have to confront at least three tough strategic questions as they move to shut off risk corridor payments. (Prior coverage is here.)

First, the courts will entertain congressional objections to any risk corridor settlements only if the House has standing to intervene in the litigation. But the question of whether the House has standing to bring an appropriations lawsuit is already teed up in House v. Burwell, which is now pending on appeal at the D.C. Circuit.

In House v. Burwell, court is likely to be suspicious of the House’s standing argument for fear that it might open the floodgates to similar appropriations disputes. The House will need to emphasize that such cases are rare, almost unique. Intervening in the risk corridor dispute would embarrass that claim. Litigation strategy in House v. Burwell thus counsels against intervening to stop the risk corridor payments.

Second, the ACA’s private-market reforms rely on the private sector to distribute government-supported benefits. In this, they reflect a conservative suspicion of the public sector and a desire to embrace private ordering. Think of proposals to voucherize Medicare or privatize Social Security.

Will private actors agree to work with the government on anything remotely controversial if they know that shifting political winds might lead Congress would renege on its financial obligations? Refusing to make risk corridor payments may advance Republicans’ effort to undermine the ACA, but at the cost of undermining the long-term viability of privatization strategies.

Third, in late 2015, the Obama administration really wanted to make full risk corridor payments. It knew that a bunch of health plans, especially the co-ops, might otherwise go under—and that’s exactly what happened.

Matters are different now. With 2016 coming to a close, the risk corridor program is about to wrap up. The insurers that can’t weather the loss of risk corridor payments have mainly shuttered already. For 2017 and beyond, those plans that are still in business will participate on the exchanges if they think they can make money. Whether they also get their risk corridor payments probably doesn’t much matter to the health of the exchanges.

That changes the politics. Cutting a big check to insurance companies is a bad look, and the Obama administration knows it. For good reason, the administration may feel some legal responsibility to settle. But if the Republicans try to amend the Judgment Fund and foreclose these lawsuits, I don’t know how vigorously a newly sworn in President Clinton would object. She might be secretly relieved if Republicans decide to throw her into that particular briar patch.


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