Health insurers warned that a move by the Trump administration on Saturday to temporarily suspend a program that was set to pay out $10.4 billion to insurers for covering high-risk individuals a year ago could drive up premium costs and create marketplace uncertainty. Insurers are already saying the decision will force them to set their premiums even higher in 2019 to make up for this uncertainty, which is likely to price more people out of the market.
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. "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers".
"The decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own", the group said.
In February, U.S. District Judge James Browning in Albuquerque, N.M., ruled that the formula used by CMS to calculate payments in the risk-adjustment program was flawed and had not been adequately justified by federal regulators. 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.
"We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act's (ACA) risk adjustment program, which is created to keep costs down for consumers while meeting the medical needs of those requiring significant care", President and CEO Scott Serota said in a statement.
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"We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", the group said in a statement Saturday. It added that the move comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates. "In light of this analysis, the Government can not lawfully make the cost-sharing reduction payments", the White House said after ending the payments in October 2017.
But supporters of the ACA criticized the CMS announcement as the latest move by the Trump administration to undermine Obamacare.
In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.
President Barack Obama's signature law, the Affordable Care Act was signed into law in March 2010. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved. The CMS has asked Judge Browning to reconsider his ruling and is awaiting a decision.