UPDATE 1-U.S. Supreme Court takes up insurers' $12 billion Obamacare dispute

The U.S. Supreme Court on Monday agreed to decide whether the federal government must pay insurers $12 billion under an Obamacare program aimed at encouraging them to cover previously uninsured people after the healthcare law was enacted in 2010.

The justices will hear an appeal by a group of insurers of a lower court ruling that Congress had suspended the government's obligation to make the payments. The insurers have argued that the ruling would allow the government to pull a "bait-and-switch" and withhold money they were promised. Insurers including Moda Health Plan Inc have said the government was supposed to help them recover from early losses they suffered after the passage of the 2010 Affordable Care Act, often called Obamacare, under Democratic former President Barack Obama.

Payments would have come through the law's so-called risk corridor program that aimed to mitigate insurers' risks from 2014 to 2016 when they sold coverage to previously uninsured people who bought insurance on exchanges established under the Obamacare law. Under the program, insurers that paid out significantly less in claims on policies sold through Affordable Care Act exchanges than they took in from premiums paid some of their gains to the government. Insurers that paid out more were entitled to compensation from the government for part of their losses.