"Risk adjustment payments" protect companies that insure a disproportionate number of people who need the most expensive health care.
In its latest move to undermine the Affordable Care Act (ACA), the Trump administration is suspending billions of dollars in payments under the legislation known as risk adjustment. Under the risk adjustment program, the federal government each year collects money from insurers with healthier customers and puts it into a pool that's used to fund insurers with sicker, higher-cost patients.
Every action the Trump administration has taken on Obamacare suggests that's their goal. "It enables the country to move away from a market where plans compete to avoid covering or charge more to people with preexisting health conditions, to one where competition is based on quality, affordable care for everyone".
Navigators are usually members of nonprofit and community organizations. "ORCRP001017-topic.html" class="local_link" >Anthem Inc. and Cigna Corp., referred to the AHIP statement when asked about the impact of the federal payment interruption. The CMS has appealed the decision, particularly because a MA court upheld such payments.
The ambiguity involved in the conflicting New Mexico and MA rulings may mean the suspension of payments will indeed be temporary.
Serota noted that the payments are required by law and said he believes the administration has the legal authority to continue making them despite the court cases.
Nonetheless, the timing is problematic.
But multiple insurers have issued statements in recent days saying the decision will likely force some companies to raise rates.
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Technically, the administration has only suspended risk adjustment payments, not permanently ended them.
Jeffrey Loo, an analyst at CFRA Research, said health insurers are preparing 2019 rates "and this suspension adds financial uncertainty". "This comes at a time when the market was looking really strong for 2019, and insurers were coming off a very profitable year". "It is important to keep in mind that the original risk adjustment payments are budget-neutral such that for some insurers to win, other insurers have to lose". That's because many ACA customers will qualify for federal government premium subsidies, which are still alive and well in Obamacare.
CMS Administrator Seema Verma says the navigators just aren't cost effective. This year they helped sign up almost 520,000 people for health insurance sold through the ACA exchange in North Carolina.
The spending cut is only one shift that CMS announced Tuesday.
In announcing the funding cuts, CMS said in a news release that navigators "failed to enroll a meaningful amount of people" on the federal marketplace and "not almost enough to justify the millions of federal dollars spent on the program".
Sen. Ron Wyden of OR, the ranking Democrat on the Senate Finance Committee, said in a statement that urging navigators to promote non-ACA plans amounts to "federally funded fraud: paying groups to sell unsuspecting Americans on junk plans that allow insurance companies to deny care on a whim and charge whatever they want is nothing but a scam".
The Associated Press contributed to this article.