The U.S. Justice Department on Tuesday faced a skeptical U.S. Supreme Court over arguments that the government had no obligation to pay $12 billion in losses incurred by insurance companies that agreed to participate in a federal program to provide health insurance for high-risk individuals through the Affordable Care Act.

The Affordable Care Act established a "risk corridors" program stating that the government "shall pay" insurers a portion of their losses for three years beginning in 2014 if their costs were higher than anticipated. Insurers were obligated to pay a portion of any savings into the program if costs were lower than expected.

But after the insurers had performed in fiscal years 2014, 2015 and 2016, and paid into the program, Congress passed appropriation riders requiring the Department of Health and Human Services to use only funds paid into the program.