Report: WH Suspends $10.4B in Obamacare Insurer Payments
11 July, 2018, 18:28
Just as more insurers and consumers were entering the ACA individual market and things seemed to be stabilizing, the Trump administration struck a new blow against the health-care sector over the weekend, cutting off the multi-billion dollar risk adjustment payments that compensate insurers for taking on sicker and more expensive patients. America's Health Insurance Plans said it was "very discouraged" by the CMS' decision, which comes as insurers determine their premiums for 2019 and states review those proposals.
Insurance stocks may be a focus in Monday morning's trading.
Because the Affordable Care Act requires insurers to accept all people regardless of their medical history or preexisting conditions, architects of the law created the risk-adjustment program to prevent insurance companies from cherry-picking the healthiest people. During his first year in office, the president pressed the Republican-led Congress to repeal much of the 2010 law that was one of President Barack Obama's signature domestic achievements. Through the program, roughly 20 million Americans have received health care coverage.
Health insurers and Covered California officials are facing another curveball from the Trump administration on the Affordable Care Act that could rattle the insurance market. The CMS has appealed the decision, particularly because a MA court upheld such payments.
The Trump administration's move "will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", association president Scott Serota said in a statement.
"As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", she said.
Seema Verma, administrator of the Centers for Medicare and Medicaid Services, listens during a meeting on healthcare reform at the White House.
The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. Paying off companies that lose money was supposed to be a temporary adjustment to changing markets. The fund would be separate from the federal risk adjustment payments and could allow the insurers to reduce their requested rate increases by as much as 30 percent.
There have been winners and losers in risk adjustment. "There is a need to analyze insurers case-by-case and account for their competitive landscapes", said Tinglong Dai, an associate professor of operations management and business analytics at the Johns Hopkins University Carey Business School. Fred Ammons, who supervises the Insure Georgia navigator organization, told the New York Times that the move will "virtually eliminate" in-person assistance for complicated Obamacare sign ups.