Trump administration halts billions of dollars of ACA payments

President Donald Trump speaks about health care from the White House in Washington. The Trump administration says it’s freezing payments under an Obamacare program that protects insurers with sicker patients

Just as more insurers and consumers were entering the ACA individual market and things seemed to be stabilizing, the Trump administration struck a new blow against the health-care sector over the weekend, cutting off the multi-billion dollar risk adjustment payments that compensate insurers for taking on sicker and more expensive patients.

The risk adjustment program plays an important role in the ACA by pooling risk for insurers, transferring funds from insurers who enroll healthier members for relatively less, to those that take on higher costs in order to enroll sicker members. Legacy insurers that have a wealth of patient data may have a leg up on coding.

The announcement came as insurers were awaiting an annual report that usually comes at the end of June, informing them of whether they owe money into the risk adjustment program or will be paid out for the previous year. About $10.4 billion was slated to be transferred previous year.

Many Trump followers often cheer cuts to Obamacare, not knowing that the Affordable Care Act and Obamacare are one in the same. 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 payments are meant to help stabilize health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices".

While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said. But another district court in MA upheld the formula.

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The new reduction of help for navigators, announced late Tuesday afternoon by the Centers for Medicare and Medicaid Services, fits within a pattern of moves by the administration to weaken the sweeping health-care law that President Trump has vowed to demolish.

CMS administrator Seema Verma said in a statement the administration was "disappointed" in the February ruling and that CMS has asked the court to reconsider and "hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans". The Maryland Insurance Administration has a hearing scheduled for July 31.

Health insurers say it is a move that could drive up premium costs and create marketplace uncertainty.

Reuters' characterization of the move is that "President Donald Trump's administration has used its regulatory powers to undermine Obamacare after the Republican-controlled Congress a year ago failed to repeal and replace the law". Paying off companies that lose money was supposed to be a temporary adjustment to changing markets.

Risk adjustment is a key aspect of market stabilization under the ACA, also known as Obamacare. Earlier this year, the Trump administration proposed to expand short-term junk plans, which are not required to cover people with pre-existing conditions. 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.

"We have to be very cautious". Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019.

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