Trump admin temporarily halting some payments under Obamacare program

Grant Boone
July 11, 2018

The payments work this way: The government takes money from insurers with healthier, low-risk customers, and gives it to insurers with less-healthy, higher-risk customers.

The president last fall also issued an executive order to try to make it easier for individuals and small businesses to buy health plans that cost less than ACA coverage because they cover fewer medical services and bypass the law's rules meant to protect people from old insurance practices in which companies had charged higher prices to women, older people, and those with preexisting medical conditions. Almost half of us living in North Dakota have a pre-existing condition and could be found "left out in the cold" without insurance. 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.

Under the risk adjustment program, insurers with healthier patients pay those with sicker patients.

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

America's Health Insurance Plans (AHIP), a national association representing health insurers, said in a statement that it was "discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", adding that it will "create more market uncertainty". The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved. "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.

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The Centers for Medicare and Medicaid Services, which oversees the ACA program, announced Saturday that a federal court ruling prevents CMS from making further collections or payments under the risk adjustment program, including an expected $10.4 billion for the 2017 benefit year.

Officials with CareFirst BlueCross BlueShield, one of two Maryland insurers that sell Affordable Care Act plans, said they need the payments to keep that part of their business afloat.

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

Navigators applying for funding will also be encouraged to show how they will educate people about the newly expanded alternatives to Obamacare, such as association health plans and short-term plans.

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 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.

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