One of the country’s struggling health insurance co-ops is taking its grievances directly to the federal government.
Illinois’ Land of Lincoln Health filed a lawsuit against the government Thursday, claiming it is being shortchanged the $72.8 million it was promised in payments under the Affordable Care Act’s so-called risk corridor program.
The program was meant to aid unprofitable insurers and stabilize consumer pricing during the first three years of the law’s new insurance exchanges. Congress axed the funding beyond what insurers paid into it, however, voting not to pay the previously promised amounts to the country’s co-ops.
In October, the government announced it would pay less than 13 cents on the dollar of the $2.87 billion requested by insurers to help cover losses. For Land of Lincoln, that meant that instead of receiving $4.5 million for 2014, it received just $550,000.
In 2015, the company says it will be owed nearly $69 million for 2015.
Land of Lincoln is one of the country’s last remaining co-ops, 13 of the original 24 having closed their doors due to massive losses. The Chicago-based insurer lost $90 million in 2015 and $7 million in the first quarter of 2016, and plans to withdraw from the group market for 2017.
It intends to stay in the individual market, where it covers 42,000 Illinois residents.
The U.S. Health and Human Services Department has not commented on the lawsuit, which is one of five similar suits filed by other insurers related to the risk corridor program.
Republican lawmakers, meanwhile, have criticized the risk corridor program as an “insurer bailout” and several believe the suit may end up providing the White House with a way to bypass the funding restriction imposed by Congress.
“What the insurers are doing is tricky. It’s an end run,” said Seth Chandler, a law professor at the University of Houston. “It’s an end run around congressional prohibition. It’s saying, ‘Okay, you said the Treasury couldn’t spend money. You’ve broken your promise, and because you broke your promise, we’re going to sue you for breach of contract.”
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