The Trump administration is halting billions of dollars of payments to insurers under the Affordable Care Act's risk-adjustment program, a move that further disrupts the insurance market and could lead to more premium increases next year.
U.S. President Donald Trump departs after speaking at a Make America Great Again rally in Great Falls, Montana, U.S., July 5, 2018.
The federal Centers for Medicare & Medicaid Services - known by the abbreviation CMS - will temporarily stop so-called "risk-adjustment payments" used to steady Obamacare health insurance premiums. The program was also cut previous year.
The Congressionally mandated risk adjustment program of the Affordable Care Act redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees, helping to ensure that sicker individuals can receive coverage by sharing the cost of covering them.
CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it.
Martin Hickey, the founder of New Mexico Health Connections, the state's health care co-op and the company that filed the lawsuit, believes the court ruling will reduce the prices and benefit consumers.
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The Trump administration on Monday announced another nail in the coffin of Obamacare, declaring it would withhold the payment of risk-adjusted premiums to insurers.
A federal court in MA upheld the same allocation formula in January.
The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations.
"As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", she said. Last year, the administration halted important subsidies for insurers.
The Republican Congress tried to repeal the Affordable Care Act at every turn in 2017 and now they are trying to take away the protection it provides for people with pre-existing conditions. In other words, the Trump Administration position in court is in favor of making the payments.
As the number of companies offering insurance on the exchanges dwindles - even with the risk adjustment program payments - the efficacy of this program should be thoroughly examined. Premiums undoubtedly will rise, and more people will be unable to afford them. The insurers have requested average rate increases for 2019 that range from 18.5 percent to 91.4 percent, depending on the type of plan.
New Mexico Health Connections and Minuteman Health of MA, two small nonprofit insurers, filed lawsuits in 2016, contending that the Obama administration created an inaccurate formula that unfairly rewarded large insurers.