USA freezes payments to ACA insurers with sicker patients

Fargo North Dakota. President Trump held a campaign style

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The program transfers funds from lower-risk enrollee plans to higher-risk ones, allowing the market to spread risk evenly.

The idea is to remove the financial incentive for insurers to "cherry-pick" healthier customers. Last year, the administration halted important subsidies for insurers.

New Mexico Health Connections and Minuteman Health of MA, two small nonprofit insurers, filed lawsuits in 2016, contending that the Obama administration created an inaccurate formula that unfairly rewarded large insurers.

"When the rules of the game change after the fact - insurers don't necessarily see the federal government as a particularly reliable partner right now", Levitt says. Small health plans also have far less capital than more established insurers to comfortably make large risk-adjustment payments. Through the program, roughly 20 million Americans have received health care coverage.

The Blue Cross Blue Shield Association, whose members are a mainstay of Affordable Care Act coverage said it was "extremely disappointed" with the administration's action. CMS says the New Mexico court's ruling bars "CMS from collecting or making payments under the current methodology, which uses the statewide average premium".

Trump's team is considering the move after a federal court decision found the formula for calculating the risk adjustment payments to be flawed. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS Administrator Seema Verma said in a statement. The Trump administration claims it is obligated to suspend these payments because of a court ruling out of New Mexico questioning their legality, but there is reason to be skeptical. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance". The Maryland Insurance Administration has a hearing scheduled for July 31. "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".

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Similarly, a year ago the Trump administration ended Obamacare's cost-sharing reduction payments to health insurers. Legacy insurers that have a wealth of patient data may have a leg up on coding.

It could also encourage more insurers to bow out of Obamacare.

Insurance Commissioner Al Redmer Jr. said that as of now he doesn't expect the latest decision to interrupt the state's rate-setting process.

The move by CMS may affect publicly traded insurers that have stuck with Obamacare, such as St. Louis-based Centene Corp.

These moves are prompting some insurers to request premium hikes for 2019 in the double digits.

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