Trump Administration Freezes Payments Required By The Affordable Care Act

Trump Administration Halts Billions In Insurance Payments Under Obamacare

Trump Administration Halts Billions In Insurance Payments Under Obamacare

The Trump administration said Saturday that it is temporarily halting billions of dollars of payments created to help insurers meet the Affordable Care Act requirement that they provide coverage regardless of whether a person is healthy or sick.

The administration said it was withholding $10.4 billion in the so-called "risk adjustment" payments, citing a district court ruling from earlier this year in New Mexico.

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. To do that, the government collects money from health insurers with enrollees who were healthier and as a result "cost less to insure". "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers".

Martin Hickey, the founder of New Mexico Health Connections, the state's health care co-op and the company that filed the lawsuit, believes the court ruling will reduce the prices and benefit consumers.

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 U.S. agency that administers Obamacare is freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands.

Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing.

"People spin the administration's decision as Trump trying to do harm, but it's exactly the opposite", he added.

"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. The idea is to insulate insurance companies from the cost of enrolling people with pre-existing conditions, and remove the incentive for insurance companies to cherry pick healthy people.

This is distinct from the debate over ObamaCare's cost-sharing payments, which the Trump Administration cut off previous year after a federal judge barred the subsidies that Congress had not appropriated.

CMS cites the late February court ruling in deciding to place a freeze on the $10.4 billion which it collected past year, and which ordinarily would be dispersed among high-risk insurers.

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

In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.

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