WEBVTT - High Court Rules on $12 Billion in Obamacare Payments

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<v Speaker 1>This is Bloomberg Law with June Grassoe at the Supreme

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<v Speaker 1>Court on Monday insures one a twelve billion dollar fight

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<v Speaker 1>over Obamacare payments. In an eight to one decision, the

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<v Speaker 1>Court said the federal government will have to pay health

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<v Speaker 1>insurers as promised to cover some of the losses they

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<v Speaker 1>incurred by providing risky policies under Obamacare. During oural arguments,

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<v Speaker 1>Justice Stephen Bryer compare the issue to one first year

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<v Speaker 1>law students would be taught day one of contracts. Jack Dawson,

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<v Speaker 1>I say to you, my hat's on the flagpole. If

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<v Speaker 1>you bring it down, I'll pay you ten dollars. You

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<v Speaker 1>bring it down, I owe you ten dollars. Now, how

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<v Speaker 1>does this differ? It didn't and if it if it

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<v Speaker 1>didn't differ, So why does the government not to have

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<v Speaker 1>to pay its contracts just like anybody else? Joining me?

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<v Speaker 1>Is Abby Gluck, a professor at Yale Law School. What's

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<v Speaker 1>the significance of this decision by the court, Well, June,

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<v Speaker 1>it's a really exciting decision for a couple of reasons. One,

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<v Speaker 1>you've got eight justices and really nine because just as

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<v Speaker 1>the leader's ascent was on different procedural grounds, upholding the

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<v Speaker 1>legitimacy of the Affordable Care Act and telling Congress that

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<v Speaker 1>it has to stand by its promises to pay to

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<v Speaker 1>many private implementers it has tasked to implement the law.

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<v Speaker 1>It's an acknowledgement of how much the Affordable Care Act

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<v Speaker 1>relies on the insurance industry and the importance of keeping

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<v Speaker 1>its promises to it. So let's go back and explain

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<v Speaker 1>what these insurers were suing over. So when the Affordable

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<v Speaker 1>Care Act was enacted, it put in place several funding

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<v Speaker 1>streams that were designed to stabilize the insurance markets. This

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<v Speaker 1>was to attract insurers into the Affordable Care Act markets

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<v Speaker 1>during those first three transitional years. The program it issue

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<v Speaker 1>in this case, the Risk Corridors program, is one of

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<v Speaker 1>those stabilization funds, and the way it was supposed to

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<v Speaker 1>work for the first three years, insurers profits and losses

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<v Speaker 1>were going to be limited, so they wouldn't be taking

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<v Speaker 1>too much risk. They set target amounts. If they made

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<v Speaker 1>too much, they put money back in. If they made

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<v Speaker 1>too little, they're supposed to get paid out by the government.

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<v Speaker 1>It turned out that insurers actually made less money than

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<v Speaker 1>anticipated in the first several years of a law. In

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<v Speaker 1>part because the Obama administration let people keep their old

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<v Speaker 1>insurance plans if they wanted to, and that wasn't factored

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<v Speaker 1>into the economic analyzes, and so HHS had to pay

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<v Speaker 1>out more than it took in. It decided to do this,

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<v Speaker 1>and the Republican senators at the time, who were trying

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<v Speaker 1>to repeal or replace the Affordable Tracks on other grounds,

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<v Speaker 1>started yelling that this was an insurance bailout and had

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<v Speaker 1>to be stopped, even though the statute doesn't say that

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<v Speaker 1>this insurance risk cor or program has to be budget neutral.

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<v Speaker 1>So Senator Marco Rubio proposed a writer to an appropriations

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<v Speaker 1>bill saying JHS could not make these extra payments, and

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<v Speaker 1>the insurers stude, saying the Affordable Tract promised them with

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<v Speaker 1>the words shall pay in the statute this money that

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<v Speaker 1>they were denied. It seems that this is a pretty

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<v Speaker 1>clear case for the insurers. Yet the Federal Circuit rule

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<v Speaker 1>that Congress had the right not to appropriate the funds.

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<v Speaker 1>How did they come to that ruling? Well, the lower

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<v Speaker 1>courts divided, and part of the issue in this case

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<v Speaker 1>is whether Congress could expressly or impliedly repeal an obligation

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<v Speaker 1>that it made very explicitly in the text of the statute,

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<v Speaker 1>and what the Supreme Court said was, no, you can't

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<v Speaker 1>use an appropriations writers sort of a sideways approach to

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<v Speaker 1>impliedly repeal a clear textual commitment on which the insurance

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<v Speaker 1>industry relied. The other thing I would emphasize you is

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<v Speaker 1>that this is a twelve billion dollar case. The former

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<v Speaker 1>Solicitor General of the United States, Paul Clement, who argued

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<v Speaker 1>some of the earlier affordable tarract cases, interestingly enough, on

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<v Speaker 1>the other side, has said several times that you don't

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<v Speaker 1>see a lot of twelve billion dollar cases at all.

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<v Speaker 1>And here we are with the Affordable character back in

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<v Speaker 1>the Supreme Court, and it just shows you how much

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<v Speaker 1>money is to stake in the law and how important

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<v Speaker 1>it's become to the economic justice. Samuel Leto dissented. As

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<v Speaker 1>you mentioned, he called it a massive bailout for insurers

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<v Speaker 1>that took a calculated risk and lost. Do you agree

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<v Speaker 1>with him, I take it not. No. I do not

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<v Speaker 1>think this is a bail out for the insurance industry.

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<v Speaker 1>And the insurance industry was promised a payment in the

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<v Speaker 1>text of the Affordable Care Act. Congress tried to in

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<v Speaker 1>a sideways fashion restind on that promise on which hundreds

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<v Speaker 1>of insurers aligned and entering the law, many insurers went bankrupt.

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<v Speaker 1>We have those cooperatives that fell apart in the first

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<v Speaker 1>of all years of the law, and in part it

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<v Speaker 1>was likely because they didn't receive these payments, and they

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<v Speaker 1>may receive them now, but it's going to be too late.

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<v Speaker 1>Will this help to stabilize the a c A in

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<v Speaker 1>any way, either financially or legally? So you know, there

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<v Speaker 1>are insurers who have liability payments owed from that time,

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<v Speaker 1>and these payments are likely to help them. The insurance

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<v Speaker 1>markets have wifely stabilized. They were looking like. This is

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<v Speaker 1>only likely to help the Affordable Care Act because it

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<v Speaker 1>actually shows us that the Supreme Court is standing behind

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<v Speaker 1>the law as unacted. If use the law of legitimate

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<v Speaker 1>and it's going to require Congress to make good on

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<v Speaker 1>what it's promised. The Affordable Care Act relies on private

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<v Speaker 1>industry at an extraordinary way, especially the insurance industry, and

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<v Speaker 1>the stabilization of the markets require the insurers to be

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<v Speaker 1>able to trust that the government is going to do

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<v Speaker 1>what a promise it would do. This decision helps to

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<v Speaker 1>enforce that stateent next week there's a challenge from religious

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<v Speaker 1>objectors over contraceptive coverage under the Affordable Care Act. Does

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<v Speaker 1>that mean there will be an eight to one decision

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<v Speaker 1>in that case as well, or is that a different

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<v Speaker 1>ball game? Yeah? I think it's a different ball game.

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<v Speaker 1>I would be wary of overreading the importance of the

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<v Speaker 1>case to say, Oh, the Supreme Court now loves the

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<v Speaker 1>Affordable Care Act and it's always going to uphold it.

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<v Speaker 1>Don't forget that in the fall, we have a huge

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<v Speaker 1>existential challenge to the existence of the entire law in

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<v Speaker 1>the case California versus Texas for god, about eighteen states

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<v Speaker 1>on the Department of Justice speaking to bring the entire

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<v Speaker 1>Affordable Care Act down. Contraception cases implicate different things, So

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<v Speaker 1>not about promises to ensures. They're about the kind of

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<v Speaker 1>accommodation process for religious employers who don't want to provide

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<v Speaker 1>birth control and other things to their employees. So they're

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<v Speaker 1>kind of apples and oranges. But do you think that

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<v Speaker 1>over time we have seen the Supreme Court with bigger

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<v Speaker 1>and bigger majorities, enforcing the law as written and accepting

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<v Speaker 1>the laws existence as legitimate, which is something President Trump

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<v Speaker 1>has refuses to do. Here the court wouldn't let the

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<v Speaker 1>government back out of promises it made to private entities.

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<v Speaker 1>Is that a principle that extends beyond this case. So

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<v Speaker 1>the legal principle that goes farther than this case on

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<v Speaker 1>that question is how it is that Congress can make

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<v Speaker 1>promises to outside entities. Going into this case, there were

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<v Speaker 1>some question about whether Congress had to actually appropriate the

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<v Speaker 1>funds to make that contractual obligation binding, and in this

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<v Speaker 1>case the court said no. Actually, every once in a while,

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<v Speaker 1>Congress can just bind itself to very strong and clear

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<v Speaker 1>statutory language regardless of whether it appropriates the money. Here,

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<v Speaker 1>the Affordable Care Act says in no uncertain terms in

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<v Speaker 1>Section two that Congress shall pay this money for the

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<v Speaker 1>risk cord Or program. To court made a big deal

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<v Speaker 1>of that work shall, as it often does in these

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<v Speaker 1>kinds of cases. And that's the principle that will expand

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<v Speaker 1>over time. Thanks for being on Bloomberg Law Abbey. That's

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<v Speaker 1>Abby Gluck, a professor at Yale Law School. Thanks for

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<v Speaker 1>listening to the Bloomberg Law Podcast. You can subscribe and

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<v Speaker 1>listen to the show on Apple Podcasts, SoundCloud, and on

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<v Speaker 1>Bloomberg dot com. Slash podcast I'm June Brosso. This is Bloomberg,