Moda Health, the Oregon health insurer that has struggled in the era of the Affordable Care Act, finally got some good news Thursday.
The U.S. Court of Claims issued a strongly worded opinion that the federal government must pay Moda $214 million it had earlier reneged on.
"The Court finds that the Government made a promise in the risk corridors program that it has yet to fulfill," wrote Judge Thomas Wheeler . "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."
The government's risk corridor program promised significant financial assistance to companies if they agreed to participate in the insurance exchanges created by the Affordable Care Act and then lost money. Moda enthusiastically jumped into the program and proceeded to hemorrhage red ink for three consecutive years.
Moda sought hundreds of millions of dollars. The Centers for Medicare and Medicaid paid out just over $12 million to Moda in 2014 and nothing in 2015 or 2016.
Other insurance companies have filed similar claims. Health Republic, a Portland-based health co-op, closed its doors after its risk corridor money never materialized. Health Republic also sued the government, seeking $5 billion in damages.
Robert Gootee, Moda's chief executive, has said his company never would have jumped so aggressively into the new markets created by the Affordable Care Act if it knew the federal government was going to renege on its obligations.
Moda's parent company was forced this spring to sell off assets and borrow additional funds in order to replenish its depleted capital reserves. Oregon's Department of Consumer and Business Services forced Moda into "supervision" - meaning all business decisions had to be cleared by the state - in January. Moda staved off being put into receivership, which is a type of corporate bankruptcy - only after raising more than $100 million this spring.
Congressional Republicans passed legislation that required all Affordable Care Act outlays to be budget neutral. It was a blatant attempt to sabotage Obamacare, said Nick Bagley, a University of Michigan law school professor.
Amidst the political maneuvering, Moda and Health Republic were collateral damage.
-- Jeff Manning
503-294-7606, jmanning@oregonian.com
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