United States freezes payments to ACA insurers with sicker patients

Desiree Burns
July 10, 2018

"It will undermine Americans' access to affordable coverage, particularly for those who need medical care the most".

Once again, the Trump administration has taken an axe to the Affordable Care Act, temporarily suspending a program that was set to pay out $10.4 billion to insurers for covering high-risk individuals past year.

Ahead of Monday's open, this was expected to cause share price movements for the major insurers. "The executive order the president signed, not long after he got to the White House after the [Inaugural] Parade was effectively, 'We're declaring war on the Affordable Care Act.'" Whitlock says, the goal has been to make the marketplace as inhospitable as possible for participating plans, and this is just one more step in that direction.

Insurance lobbyists said that they were puzzled and confused as to why the administration suspended the payments at this time. In a March 2018 ruling out of New Mexico, US District Court Judge Thomas Browning that the methodology used by the federal government was "arbitrary and capricious" and remanded it back to the agency, according to Lexis Legal News.

The main insurance trade associations in Washington have been organizing calls with their member companies and trying to coordinate a response.

"We were disappointed by the court's recent ruling," CMS Administrator Seema Verma said in a statement.

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The Centers for Medicare and Medicaid Services, which administers programs under the Affordable Care Act, indicated that about $10.4 billion in risk adjustment payments are impacted, according to reports. For example, it could have provided a more detailed explanation of the formula to the New Mexico court and kept the payments going.

The CMS statement said the agency will "provide additional guidance shortly on how it will handle other issues relating to risk adjustment payments".

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

The risk-adjustment program, which does not cost taxpayers any money and is required by law, is created to ensure that health care coverage is available for sicker, higher-cost patients by sharing the cost of covering them.

But since the Trump Administration removed the fine for not buying health insurance, Republicans argue that the removal of the threat of that "tax" now makes the law unconstitutional.

"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. "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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