The Trump administration announced Saturday that it will temporarily halt billions of dollars in payments under the Affordable Care Act's risk adjustment program, a move that could shake up insurance markets.
The Centers for Medicare and Medicaid Services said Saturday it was forced to halt further collections or payments under the ACA program known as risk adjustment, because of a federal judge's ruling. Instead, money is collected from insurers that have healthier enrollees overall and then given to insurers with sicker, more expensive enrollees to help cover their costs. The permanent program was meant to reduce the incentive for health insurers to cherry-pick healthy members. About $10.4 billion was slated to be transferred past year. "And costs for taxpayers will rise as the federal government spends more on premium subsidies".
Risk-adjustment payments are one way the Affordable Care Act - Obamacare's formal name - stabilizes health insurance prices. It will create more market uncertainty and increase premiums for many health plans - putting a heavier burden on small businesses and consumers, and reducing coverage options. "It will undermine Americans' access to affordable coverage, particularly for those who need medical care the most".
The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization.More news: Red OnePlus 6 now available for purchase for $580
In February, U.S. District Judge James Browning in Albuquerque, N.M., ruled that the formula used by CMS to calculate payments in the risk-adjustment program was flawed and had not been adequately justified by federal regulators.
In the MA case, however, a federal judge upheld the Obamacare formula, the Journal reports.
"We were disappointed by the court's recent ruling", said CMS Administrator Seema Verma. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved. The Maryland Insurance Administration has a hearing scheduled for July 31.
"This action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", Serota said in a statement.More news: Shop Prince George's and Princess Charlotte's adorable outfits
Similarly, previous year the Trump administration ended Obamacare's cost-sharing reduction payments to health insurers. The White House supported two attempts in Congress a year ago to repeal the program, which insures about 20 million Americans. These include eliminating the individual mandate penalty and broadening the availability of two alternatives to Affordable Care Act policies.
Insurance Commissioner Al Redmer Jr. said that as of now he doesn't expect the latest decision to interrupt the state's rate-setting process. Donald Trump's move to gut Obamacare guarantees it.
These moves are prompting some insurers to request premium hikes for 2019 in the double digits.
A professor who follows Obamacare said it is unclear if the payments' suspension will result in higher premiums. "Cutting such payments achieves the opposite effect".More news: England v Croatia: Head-to-head record and previous meetings
If an insurer does not have the financial cushion to deal with losing the payments, "some insurers may say this is not a risk that we're willing to take and walk away", he said. "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers". In Maryland, Kaiser usually ends up paying CareFirst.