The Trump administration said Saturday it's freezing payments under an "Obamacare" program that protects insurers with sicker patients from financial losses, a move expected to add to premium increases next year.
In a weekend announcement, the Centers for Medicare and Medicaid Services said the administration is acting because of conflicting court ruling in lawsuits filed by some smaller insurers who question whether they are being fairly treated under the program. Payments for 2017 are $10.4 billion.
"Risk adjustment under the ACA has been an example of a well-meaning regulation that has had destructive impacts directly contrary to its intent", Jonathan Halvorson, a health care public policy adviser at consulting firm Sachs Policy Group, stated in an article for The Health Care Blog. "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. "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers". The CMS has appealed the decision, particularly because a MA court upheld such payments.
More broadly, the move contributes to a string of actions from the Trump administration, including the cancellation of other ObamaCare payments previous year, that have added to insurers' uncertainty and frustration. "And costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.
"We were disappointed by the court's recent ruling".
"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices".
The Blue Cross Blue Shield Association, a federation of 36 Blue Cross and Blue Shield companies nationwide, also expressed disapproval at the move, saying it could create "turmoil" in the market.
The decision comes after a March 2018 court ruling that found the formula for calculating risk adjustment payments was "arbitrary and capricious".
"I think insurers are going to be watching very closely what the administration says in court, and whether this is a sign of further steps to undermine the law, or a good faith effort to try to comply with the judge's order", he says.
It could encourage more insurers to bow out of the Affordable Care Act.
Trump and his team have continued to argue that the individual mandate is unconstitutional and has promised to refuse to defend any parts of Obamacare in court.
These moves are prompting some insurers to request premium hikes for 2019 in the double digits.