Published: Mon, July 09, 2018
Medical | By

Trump administration halts billions in insurance payments under Obamacare

Trump administration halts billions in insurance payments under Obamacare

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. All in all, the program was slated to shift $10.4 billion among insurers in 2017, according to the agency. The idea is to insulate insurance companies from the cost of enrolling people with pre-existing conditions, and remove the incentive for insurance companies to cherry pick healthy people.

The program is critical to markets under the Affordable Care Act because insurers with healthier consumers enrolled in plans reimburse insurers with sicker and more expensive enrollees.

Trump administrators suspended the payments over a February ruling by a federal district court in New Mexico, according to the reports.

Officials said Saturday that the administration is acting because of conflicting rulings in lawsuits filed by some smaller insurers who question whether they're being fairly treated. Medicare private insurance plans also use the strategy.

"This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own".


"Any action to stop disbursements under the risk adjustment program will significantly increase 2019 premiums for millions of individuals and small-business owners, and could result in far fewer health plan choices", said Justine G. Handelman, a senior vice president of the Blue Cross and Blue Shield Association. "And costs for taxpayers will rise as the federal government spends more on premium subsidies". CMS has made no public statements regarding policy changes for the risk-adjustment payments as of yet. Legacy insurers that have a wealth of patient data may have a leg up on coding.

The decision comes after a March 2018 court ruling that found the formula for calculating risk adjustment payments was "arbitrary and capricious". The agency said it will release additional guidance for insurers on issues related to the risk-adjustment program, including appeals and how this will affect medical loss ratios.

"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.

But supporters of the ACA criticized the CMS announcement as the latest move by the Trump administration to undermine Obamacare.

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