Blue Cross and Blue Shield joined a growing roster of health insurers Thursday that are suing the federal government to collect millions of dollars the companies say they are owed under the Affordable Care Act.
In a lawsuit filed in U.S. District Court in Washington, Blue Cross says it’s owed $130 million in financial assistance for 2014, the first year that Americans were required to buy health insurance under the health care law. Blue Cross said it expects to be owed $175 million for its losses in 2015.
The Chapel Hill insurer is seeking to collect payments under the ACA’s risk corridor program, which was established by Congress to compensate insurers for financial losses in the first years of the ACA. In 2014, Blue Cross took a $50.6 million operating loss, its first loss in 15 years, due to losses in its ACA business.
The Department of Health and Human Services has been unable to fully compensate health insurers because Congress has refused to appropriate the funds for risk corridors. For 2014, Blue Cross received $18 million and is still owed $130 million, according to the lawsuit.
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“The federal government’s failure to honor its legal obligations contributed significantly to our ACA losses in 2014 and 2015 and makes it more challenging for our company to continue selling ACA products to our customers,” said Blue Cross CEO Brad Wilson in a statement.
The Obama Administration had planned to rely on other funds to pay insurers, but Republican leaders in Congress who oppose the ACA enacted a provision forbidding the use of other funds for risk corridors, claiming that the risk corridor program constitute a “bail out” of insurers, said Mark Hall, a health law professor at Wake Forest University in Winston-Salem.
The ACA’s three-year risk corridor program, which expires this year, is one of three financial aid mechanisms created by the ACA to compensate insurers who agreed to sell subsidized health insurance.
Blue Cross says it lost $405 million on ACA customers in 2014 and 2015, and that’s after it was paid $313 million from the three ACA assistance programs. As a result of the losses, Blue Cross raised rates by an average 32.5 percent this year and is seeking an 18.8 percent increase for 2017.
In addition for refunding insurers for their losses, the risk corridor program requires insurers to pay into a federal insurance pool if they report a surplus on their ACA business, Blue Cross noted in its lawsuit.
Blue Cross is now reevaluating its commitment to the ACA and might withdraw from some counties or potentially stop offering ACA plans altogether. It will announce its decision in August regarding ACA coverage in North Carolina.
Blue Cross’s decision to offer ACA plans in all 100 counties in the state helped push North Carolina to the fourth-highest ACA enrollment in the nation. This year, for example, Blue Cross covers more than half of the 610,000-plus residents insured under the federal health care law.