This is Bloomberg Law with June Grassoe at the Supreme Court on Monday insures one a twelve billion dollar fight over Obamacare payments. In an eight to one decision, the Court said the federal government will have to pay health insurers as promised to cover some of the losses they incurred by providing risky policies under Obamacare. During oural arguments, Justice Stephen Bryer compare the issue to one first year law students would be taught day one of contracts. Jack Dawson,
I say to you, my hat's on the flagpole. If you bring it down, I'll pay you ten dollars. You bring it down, I owe you ten dollars. Now, how does this differ? It didn't and if it if it didn't differ, So why does the government not to have to pay its contracts just like anybody else? Joining me? Is Abby Gluck, a professor at Yale Law School. What's the significance of this decision by the court, Well, June,
it's a really exciting decision for a couple of reasons. One, you've got eight justices and really nine because just as the leader's ascent was on different procedural grounds, upholding the legitimacy of the Affordable Care Act and telling Congress that it has to stand by its promises to pay to many private implementers it has tasked to implement the law. It's an acknowledgement of how much the Affordable Care Act relies on the insurance industry and the importance of keeping
its promises to it. So let's go back and explain what these insurers were suing over. So when the Affordable Care Act was enacted, it put in place several funding streams that were designed to stabilize the insurance markets. This was to attract insurers into the Affordable Care Act markets
during those first three transitional years. The program it issue in this case, the Risk Corridors program, is one of those stabilization funds, and the way it was supposed to work for the first three years, insurers profits and losses were going to be limited, so they wouldn't be taking too much risk. They set target amounts. If they made too much, they put money back in. If they made too little, they're supposed to get paid out by the government.
It turned out that insurers actually made less money than anticipated in the first several years of a law. In part because the Obama administration let people keep their old insurance plans if they wanted to, and that wasn't factored into the economic analyzes, and so HHS had to pay
out more than it took in. It decided to do this, and the Republican senators at the time, who were trying to repeal or replace the Affordable Tracks on other grounds, started yelling that this was an insurance bailout and had to be stopped, even though the statute doesn't say that this insurance risk cor or program has to be budget neutral.
So Senator Marco Rubio proposed a writer to an appropriations bill saying JHS could not make these extra payments, and the insurers stude, saying the Affordable Tract promised them with the words shall pay in the statute this money that they were denied. It seems that this is a pretty clear case for the insurers. Yet the Federal Circuit rule that Congress had the right not to appropriate the funds.
How did they come to that ruling? Well, the lower courts divided, and part of the issue in this case is whether Congress could expressly or impliedly repeal an obligation that it made very explicitly in the text of the statute, and what the Supreme Court said was, no, you can't use an appropriations writers sort of a sideways approach to impliedly repeal a clear textual commitment on which the insurance industry relied. The other thing I would emphasize you is
that this is a twelve billion dollar case. The former Solicitor General of the United States, Paul Clement, who argued some of the earlier affordable tarract cases, interestingly enough, on the other side, has said several times that you don't see a lot of twelve billion dollar cases at all. And here we are with the Affordable character back in the Supreme Court, and it just shows you how much money is to stake in the law and how important
it's become to the economic justice. Samuel Leto dissented. As you mentioned, he called it a massive bailout for insurers that took a calculated risk and lost. Do you agree with him, I take it not. No. I do not think this is a bail out for the insurance industry. And the insurance industry was promised a payment in the
text of the Affordable Care Act. Congress tried to in a sideways fashion restind on that promise on which hundreds of insurers aligned and entering the law, many insurers went bankrupt. We have those cooperatives that fell apart in the first of all years of the law, and in part it was likely because they didn't receive these payments, and they may receive them now, but it's going to be too late. Will this help to stabilize the a c A in
any way, either financially or legally? So you know, there are insurers who have liability payments owed from that time, and these payments are likely to help them. The insurance markets have wifely stabilized. They were looking like. This is only likely to help the Affordable Care Act because it actually shows us that the Supreme Court is standing behind the law as unacted. If use the law of legitimate and it's going to require Congress to make good on
what it's promised. The Affordable Care Act relies on private industry at an extraordinary way, especially the insurance industry, and the stabilization of the markets require the insurers to be able to trust that the government is going to do what a promise it would do. This decision helps to enforce that stateent next week there's a challenge from religious
objectors over contraceptive coverage under the Affordable Care Act. Does that mean there will be an eight to one decision in that case as well, or is that a different ball game? Yeah? I think it's a different ball game. I would be wary of overreading the importance of the case to say, Oh, the Supreme Court now loves the Affordable Care Act and it's always going to uphold it.
Don't forget that in the fall, we have a huge existential challenge to the existence of the entire law in the case California versus Texas for god, about eighteen states on the Department of Justice speaking to bring the entire Affordable Care Act down. Contraception cases implicate different things, So not about promises to ensures. They're about the kind of accommodation process for religious employers who don't want to provide birth control and other things to their employees. So they're
kind of apples and oranges. But do you think that over time we have seen the Supreme Court with bigger and bigger majorities, enforcing the law as written and accepting the laws existence as legitimate, which is something President Trump has refuses to do. Here the court wouldn't let the government back out of promises it made to private entities.
Is that a principle that extends beyond this case. So the legal principle that goes farther than this case on that question is how it is that Congress can make promises to outside entities. Going into this case, there were some question about whether Congress had to actually appropriate the funds to make that contractual obligation binding, and in this case the court said no. Actually, every once in a while, Congress can just bind itself to very strong and clear
statutory language regardless of whether it appropriates the money. Here, the Affordable Care Act says in no uncertain terms in Section two that Congress shall pay this money for the risk cord Or program. To court made a big deal of that work shall, as it often does in these kinds of cases. And that's the principle that will expand over time. Thanks for being on Bloomberg Law Abbey. That's Abby Gluck, a professor at Yale Law School. Thanks for
listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot com. Slash podcast I'm June Brosso. This is Bloomberg,