Published: Tue, July 10, 2018
Medical | By

Trump administration halts billions in Obamacare payments to health insurers

Trump administration halts billions in Obamacare payments to health insurers

About 20 million Americans have received health insurance coverage through the program known as 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 move brought a sharp response from health insurers warning of market disruptions and higher costs.

Ahead of Monday's open, this was expected to cause share price movements for the major insurers.

"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.

Why were the payments suspended?

The New Mexico ruling found fault with the formula used by the government to calculate the payments, saying it was "arbitrary and capricious".

"We were disappointed by the court's recent ruling," CMS Administrator Seema Verma said in a statement. The administration has to have a legal justification for their actions.


In the MA case, however, a federal judge upheld the Obamacare formula, the Journal reports.

But a bigger concern for now is how long the suspension of payments will last. If the administration makes a good faith effort to resolve the court ruling, the issue could be fixed within weeks and not have a significant long-term impact. "This is one of several steps the Trump administration has taken to undermine the ACA". 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 federal court ruling prevents the agency, which administers the Obamacare risk-adjustment program, from making further collections or payments, including those for the 2017 benefit year, until the litigation is resolved, the agency said. "We are continuing that process today and over the course of this week".

President Donald Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress a year ago failed to repeal and replace the law propelled by Democratic President Barack Obama. Eventually, experts say, some insurers could simply get fed up and exit ObamaCare markets, leading to fewer choices for consumers.

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.

"We want to make sure that we keep our insurers in the market", he said.

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