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Judge Rules Health Insurance Companies Matter More Than Taxpayers

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Tags HealthLegal System

02/13/2017

Largely overlooked last week in the wake of President Donald Trump’s court battle was another controversial judicial ruling. On Thursday the US Court of Claims rewarding Moda Health, an Oregon-based health insurer, $214 million for losses it took participating in the high risk insurance pools established under the Affordable Care Act. The dispute came after Republicans eliminated funding for tax payer subsidies to those firms that lost money writing insurance for high risk individuals.

As Judge Thomas Wheeler wrote:

The Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill. Today, the Court directs the Government to fulfill that promise. After all, to say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government.

Of course history shows that this behavior is quite characteristic of "our great government."

After all, Obamacare itself was sold to the public based on multiple (and intentional) lies. These included, the cost of Obamacare and the impact it would have on individuals pre-existing insurance coverage, as well as their ability to keep their doctor. The Supreme Court was only able to maintain Obamacare by interpreting the individual mandate as a tax, after the legislation’s defenders explicitly argued it wasn’t.

The result of all of this was government effectively telling its citizens, "The joke is on you. You shouldn’t have trusted us."

Of course it is not Moda Health’s fault that government lied through its teeth, and it is easy to find sympathy in their plight. As they argued in this case, the company only “aggressively” engaged in the ACA’s high risk insurance pools because they had an expectation to be compensated by government, as initially outlined in the law. As such, the company has been suffering severe losses and almost went into receivership based on their dire fiscal situation.

Yet it is not the Obama Administration that will be left paying Moda Health hundreds of millions of dollars, but the taxpayers who themselves were victims of fraud. Further, since Moda is just the first of many health insurers suing the government of the change in policy, if this precedent continues the costs to taxpayers will end up being billions of dollars.

At the end of the day, Moda was not forced to enter the high risk market and did so knowing this was a highly controversial piece of legislation that was subject to change, and with a government that has a history of not upholding its promises. Just as contracts based on Ponzi schemes and other fraudulent forms of financing are not held up in court, Moda Health and other health insurance companies should not be entitled to the money Obamacare’s victims.

All last week’s court ruling demonstrated was that the interests of health insurance companies are to be protected at the expense of the American people. Unfortunately, that mindset also explains how America’s health system became what it is today

Tho directs the Mises Institute's social media marketing (e.g., twitter, facebook, instagram), and can assist with questions from the press.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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