The Trump administration's decision to freeze billions in payments to health insurers with plans under Obamacare that cover a higher number of sicker patients could cause health care premiums to rise in 2019.
The Centers for Medicare & Medicaid Services said today that the February action by the trial court in New Mexico "prevents CMS from making further collections or payments under the risk adjustment program, including amounts for the 2017 benefit year, until the litigation is resolved".
The Trump administration is halting billions of dollars in payments required under the ACA, citing a district court decision in New Mexico from earlier this year. The risk-adjustment program has been a source of frustration for small insurers and ACA co-ops that claim the formula makes their membership bases look healthier than they are.
The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization.
The pro-ACA group Protect Our Care issued a statement from its executive director, Brad Woodhouse, Saturday after the administration announced its decision regarding risk penalty payments, characterizing the move as further chipping away at the Affordable Care Act. Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019. The CMS has appealed the decision, particularly because a MA court upheld such payments.
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She noted it is the latest action by the administration of President Donald J. Trump, which has weakened the landmark law that expanded healthcare for many more Americans. "It will create more market uncertainty and increase premiums for many health plans - putting a heavier burden on small businesses and consumers, and reducing coverage options", AHIP said.
An insurance industry source said one fix the industry is pushing for is providing that additional explanation to the court, through what is known as an interim final rule, in order to resume payments.
"We were disappointed by the court's recent ruling", CMS Administrator Seema Verma said in the agency's statement. Insurers say, the timing of the decision could mean higher premiums for millions of individuals and small businesses next year.
Insurance companies responded quickly on Saturday with their disapproval.
It could encourage more insurers to bow out of the Affordable Care Act. "There is a need to analyze insurers case-by-case and account for their competitive landscapes", said Tinglong Dai, an associate professor of operations management and business analytics at the Johns Hopkins University Carey Business School.