Published: Mon, July 09, 2018
Medical | By Vicki Mclaughlin

Trump administration halts billions in insurance payments under Obamacare

Trump administration halts billions in insurance payments under Obamacare

WASHINGTON-The Trump administration's move to suspend billions of dollars in payments that insurers expect injects new uncertainty into the Affordable Care Act's insurance markets right as the companies are deciding next year's rates.

The Centers for Medicare and Medicaid Services (CMS), the agency that oversees the program, cited a recent federal court decision that found the formula for calculating the risk adjustment payments to be flawed.

The U.S. agency that administers Obamacare is freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS Administrator Seema Verma said.

America's Health Insurance Plans (AHIP), a trade group representing insurers offering plans via employers, through government programs and in the individual marketplace, said the CMS suspension would create a "new market disruption" at a "critical time" when insurers are setting premiums for next year.

CMS was expected to put out a report at the end of June regarding the payments, but that report has not yet been released.

The CMS makes risk-adjustment payments to insurers to help encourage them to participate in the marketplace and offset the costs of enrolling more expensive - high risk - people in insurance pools. Insurers say, the timing of the decision could mean higher premiums for millions of individuals and small businesses next year.

"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices". "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance".

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"We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act's (ACA) risk adjustment program, which is created to keep costs down for consumers while meeting the medical needs of those requiring significant care", President and CEO Scott Serota said in a statement. "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.

"I think insurers are going to be watching very closely what the administration says in court, and whether this is a sign of further steps to undermine the law, or a good faith effort to try to comply with the judge's order", he says.

The payments are meant to help stabilize health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

It also comes as insurers appeared to be warming back up to the ACA.

Trump continues to attack Obamacare even as almost a dozen insurers have started to warm to the program with at least a dozen states seeing an increase in the number of insurers participating in the healthcare exchange.

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