Insurer Highmark Inc. has filed suit against the federal government, saying it owes the company almost $223 million under the Affordable Care Act program's "risk corridors," which are set in place to limit the risks undertaken by companies taking part in Obamacare marketplaces.
"All we're asking is for the federal government to do what they promised," Highmark Health chief executive, David Holmberg,
told The Wall Street Journal.
He noted the company filed the lawsuit out of fiduciary responsibility to its policy holders. Highmark is the insurance arm of Highmark Health, a nonprofit based in Pittsburgh, and is a major marketplace provider for three states.
Several other insurance companies have also suffered shortfalls in risk-corridor payments, reports The Wall Street Journal. Ana Gupte, an analyst with Leerink Partners LLC, said that there will other publicly traded companies that could come under "pressure from shareholders to file their own suits."
Highmark Health lost $85 million last year from revenue of about $17.7 billion, with most of the losses coming from its Obamacare business. Last fall, the Department of Health and Human Services announced that insurers would only get 12.6 percent of risk-corridor losses for 2014, when the program began, but Highmark is seeking the full amount it says it has coming, minus $27 million it already has received.
Highmark filed its lawsuit on Tuesday in the U.S. Court of Federal Claims in Washington, D.C., the same place where another insurer, Health Republic Insurance Co., filed suit in February, seeking a class action status.
No ruling has been made in the Health Republic suit, said corporate attorney Stephen Swedlow.
Through the risk-corridor program, which ends in 2017, companies that lose money are to collect funds coming from payments from other insurance companies that did well with their marketplace business, and Highmark says federal officials promised in-full payment, even if other insurers had not chipped in enough money.
Later, though, the program was shifted to become "budget neutral," so only as much money as it collected from insurers that made money.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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