WASHINGTON, D.C. — In the wake of the passage of the Affordable Care Act (ACA) under President Barack Obama, dozens of new insurance companies sprang up in 2014 partly because of a feature of the ACA called the Risk Corridor Program. The program established that if, during the years 2014 through 2016, one of these new insurance companies lost money because of the unknown risks involved in this new marketplace, the federal government would cover the losses of the insurance companies.

In part of New York State, including Sullivan County, a new company called Health Republic was established and signed on many new customers, including several people who worked at The River Reporter. At the time, Health Republic offered one of the most affordable insurance plans available in this part of New York State, and the Risk Corridor Program was intended to insure that it could be profitable in the early years of its existence. Many other similar insurance companies were started in other states.

In 2014, through the appropriation process, Congress passed legislation that lawmakers interpreted to mean that the federal government would not have to make the risk corridor payments that had been promised when the ACA took effect in 2010. Ultimately, the federal government owed the insurance companies $12 billion, and about $12 million was owed to Health Republic. Without the payments, Health Republic came under serious financial pressure and was forced into liquidation by the superintendent of Financial Services of New York State. Health Republic closed down its business operation, as did dozens of new insurance companies in other states. 

The insurance companies sued, seeking to be paid the promised risk corridor payments and ultimately the case made its way to the Supreme Court of the United States (SCOTUS) which handed down a decision on April 27. In the eight-to-one ruling, the court said the federal government must pay the insurance companies the money it had promised. Justice Sonia Sotomayor, who wrote the decision, said it was based on “a principle as old as the nation itself: the government should honor its obligations.”