Trump administration halts billions in insurance payments under Obamacare

Trump admin expected to suspend some ObamaCare risk adjustment payments: report | TheHill

President Donald Trump's administration is freezing billions of dollars in payments to health insurers under the Affordable Care Act's risk adjustment program.

The U.S. Court for the District of New Mexico ruled the methodology used by the federal government to collect the payments was "arbitrary and capricious".

While the administration says it is required to stop payments because of the court decision, insurers say the move could result in higher premiums for millions of individuals and small businesses. It's a move that could shake up insurance markets. "CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets".

The Affordable Care Act's (ACA) "risk adjustment" program is meant to incentivize health insurers to cover individuals with pre-existing and chronic conditions by collecting money from insurers with relatively healthy enrollees to offset the costs of other insurers with sicker ones, according to Reuters.

"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. Medicare private insurance plans also use the strategy. "It will undermine Americans' access to affordable coverage, particularly those who need medical care the most". 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.

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The payments are meant to help stabilize health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

"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.

Trump and his team have continued to argue that the individual mandate is unconstitutional and has promised to refuse to defend any parts of Obamacare in court. Last year, the administration halted important subsidies for insurers.

The administration has made several other moves in recent years to scale back or halt implementation of certain aspects of the ACA.

The ripple comes at a pivotal time for the Affordable Care Act's marketplace.

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