Insurers vs. Congress over ACA payments: Nick Bagley weighs in

It may have gotten overshadowed by the national election, but there’s another ugly battle raging in Washington, D.C. right now – with several billion dollars at stake.

This battle pits health insurance companies against Republican members of Congress, and hinges on the legal interpretation of an obscure part of the Affordable Care Act. The Obama administration just put its foot in the ring to try to referee the situation.

IHPI member and U-M Law School professor Nicholas Bagley, J.D., provides a ringside play-by-play of the bout in a new Perspective article in the New England Journal of Medicine.

The piece lays out in plain language what the two sides disagree sharply about, and Bagley provides his opinion about who’s probably right, based on legal precedent.

The two sides disagree over whether the federal government should pay insurers that lost money when they sold insurance plans to individual Americans under the ACA. The law provides for this kind of payment in the ACA’s first few years, but Congress has not allocated funds to the federal kitty that would actually pay them.

The insurance industry has started to sue to get its money, and the Justice Department is fighting back. But the Obama administration recently signaled a willingness to settle these claims out of another source of funds – which caused members of Congress to cry foul.

After evaluating the claims and counterclaims, Bagley concludes that Republicans’ legal arguments in this situation don’t hold water. He says insurers appear to have a strong case to make for payment – which makes the administration’s the offer to settle a reasonable one.

The outcome of the election, in the balance between the parties in Congress, may make the difference in this battle. Expect more from Bagley on this topic in the future as he blogs on The Incidental Economist.