Insurer Sues Government Over Massive Losses Because Of Obamacare

REUTERS/Jonathan Ernst

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Juliegrace Brufke Capitol Hill Reporter
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Nonprofit health insurer Highmark Inc. filed a lawsuit against the federal government Tuesday demanding roughly $223 million in payments it says it’s owed under the Obamacare’s risk-corridors program.

The Pittsburgh-based insurance provider – which plays a major role in the Pennsylvania, Delaware and West Virginia marketplaces – said by not making the payments, the government is in violation of the Fifth Amendment because it’s not providing the company with the “just compensation” it was promised.

The risk-corridors program, which was created to limit insurers that provide qualified health plans losses by providing funding to companies facing high claims costs for enrollees, saw far more claims than initially expected. And the Department of Health and Human Services paid just $362 million in risk corridors charges of the $2.87 billion requested in 2014.

The Wall Street Journal reports Highmark lost roughly $85 million last year, largely due to ACA plans.

“For 2014 alone, government officials have acknowledged that this program should have reimbursed Highmark for more than $220 million based on a mathematical formula everyone agreed on when the ACA was created,” Highmark President and CEO David Holmberg said in a blog post. “The government now says it will pay only about $28 million of that amount. In effect, that leaves our organization to pick up the remaining tab. That’s not acceptable.”

The company said it repeatedly reached out to the government on the issue but its requests went unanswered, pushing it to file the suit. Highmark’s lawsuit is the latest blow in a string of issues the ACA has faced in recent months –the Health Republic Insurance Co. filed a similar suit in February.

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Juliegrace Brufke