Justices weigh Maine health insurer’s claim of ACA ‘bait-and-switch’

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One of Maine’s leading health insurers is hoping for a major victory before the U.S. Supreme Court in a case testing provisions of the Affordable Care Act.

Community Health Options of Lewiston was one of many insurers affected when payments it believed were guaranteed by the landmark law enacted under President Obama in 2010 were eliminated after Republicans assumed full control of Congress in 2015.

Prominent Washington, D.C., attorney Paul Clement argued for the insurers Dec. 10 in Maine Community Health Options v. United States.

Clement – a Maine native who has argued nearly 100 cases before the Supreme Court – minced no words about the government’s de-appropriation, calling it “a massive bait-and-switch.”

The program involved is called “risk corridors,” designed to attract insurers to underserved, but risky markets. If an insurer loses money, it’s supposed to be compensated by the federal government. But since 2015, no payments have been made.

Kevin Lewis, president and chief executive of Community Health Partners, which has 37,000 policyholders.

Community Health Options – a charter member of the federal insurance exchange created by the ACA in 2014 – actually paid $2 million into the “risk corridors” fund that year, since it did better than expected on initial rates. Insurers experiencing losses were to be reimbursed by the federal treasury, and that didn’t happen.

Those losses are now substantial: $59 million for Community Health Options, and $12 billion for insurers nationwide. The Lewiston cooperative became the lead plaintiff in the insurers’ consolidated case.

But Justice Ruth Bader Ginsburg had a question for Clement: Even though the Affordable Care Act mandates that the government “shall pay” insurers, if it doesn’t, are insurers allowed to sue the government to recover losses?

Clement’s answer must have satisfied the justices, for the questioning soon honed in on the “shall pay” language, when Deputy Solicitor General Edwin Kneedler offered the government’s defense.

Justice Stephen Breyer employed a homely analogy that’s sometimes used in law school: Your windblown hat has gotten stuck at the top of a flagpole. If you tell someone you’ll pay them $10 to retrieve the hat, have you created a binding contract? Breyer made it clear to Kneedler he believed the insurers’ contract was equally binding.

As oral arguments ended, it seemed at least six justices, including Brett Kavanaugh and Chief Justice John Roberts, were inclined to favor the insurers, while only one – Samuel Alito – seemed to side with the government.

Kevin Lewis, Community Health Options president and chief executive officer, said it was a good day in court for the insurer, but he’s cautious about the effects. Even if the court rules in its favor, and the $59 million is paid, it won’t change things overnight.

“Our receivables are very high,” Lewis said, and it will take time before the company again considers expanding.

Community Health Options joined the New Hampshire exchange in 2015, but exited in 2017, in part – as Lewis acknowledged – because of the absence of the “risk corridors” payments. He was non-committal about going back, but did say, “A lot of our customers said they were sorry to see us go.”

Despite that setback, Lewis said the company has performed well. Its 2019 revenues, through the first three quarters, are $195 million, and it has 170 employees.

There are 37,000 policyholders/members, of which 11,000 are insured through small- and large-group plans, a portfolio that’s been growing. Still, “we need to concentrate capital” before deciding whether further growth is prudent, Lewis said.

Community Health Options was an immediate hit on the “Obamacare” exchange in 2014, gaining 80 percent of the business to just 20 percent for Anthem, the for-profit successor to Maine Blue Cross-Blue Shield. Since then, Harvard Pilgrim, another nonprofit, has joined the exchange, and the three insurers roughly split the pie, although Community Health Options still has the largest share – about 40 percent.

It’s also a survivor. Of 24 cooperatives created through the Affordable Care Act, only four endured. Lewis, who came from the primary-care field, not insurance, said the co-op has thrived because of its intense focus on customer service, and constantly improving policies.

Since Congress ultimately didn’t include a “public option” in the Affordable Care Act in 2010 – the House approved, but the Senate did not – the cooperatives are, in a sense, a legacy of Dirigo Health, which was Maine’s first attempt to broaden the market for individuals and small businesses.

Trish Riley, who designed that plan for Gov. John Baldacci in 2003, said the Community Health Options case raises similar issues.

Dirigo Health policies were originally offered by Anthem, which also repeatedly sued, unsuccessfully, against the program’s major funding source, an assessment on all health insurers. It was only near the end that Harvard Pilgrim assumed the Dirigo portfolio. Shortly thereafter, Gov. Paul LePage convinced lawmakers to repeal the program in 2011.

“But there was more to Dirigo than just a nonprofit insurer,” Riley said. She holds out hope for Gov. Janet Mills’ plan to create a Maine-based insurance exchange to replace the federal exchange the state has used since 2014.

“With the state setting the terms of enrollment, in addition to regulating rates,” she said, “it could be a real step toward improving coverage.”

Douglas Rooks has covered Maine issues for 35 years as a reporter, editorial writer, columnist and editor of Maine Times.