Wednesday, 19 September, 2018

Maryland insurers say Trump Administration to cut health payments destabilizes market

Credit Kaiser Family Foundation Credit Kaiser Family Foundation
Melissa Porter | 13 July, 2018, 22:57

Ray's group received $4.9 million a year ago to fund more than 130 navigators across Florida to reach the state's vulnerable residents. It's a smaller pot of money with more competitors.

The Affordable Care Act's (ACA) "risk adjustment" program is meant to incentivize health insurers to cover individuals with pre-existing and chronic conditions by collecting money from insurers with relatively healthy enrollees to offset the costs of other insurers with sicker enrollees. This idea of pooling risk has had significant practical effects: encouraging insurers to participate in the insurance marketplaces the ACA created for Americans who can not get affordable health benefits through a job.

In justifying the cuts, CMS said the program is an "established marketplace" heading into its sixth year, so many people are more familiar with it. The agencies in a statement said that they were seeking legal redress and understanding and will be informing all the involved participants of any bring up-to-date information regarding the current collections or future payments at the right time. In January a federal court in MA ruled the formula wasn't arbitrary and capricious. "This decision reflects CMS's commitment to put federal dollars for the federally-facilitated exchanges to their most cost effective use in order to better support consumers through the enrollment process", said CMS Administrator Seema Verma.

CMS is freezing $10.4 billion in Affordable Care Act risk-adjusted payments, created to stabilize the insurance market by redistributing money to insurers with higher-cost members. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold". The ACA was implemented four years ago, so knowledge is widespread and the investment needed to educate Americans is likely far lower than before. "CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets". The Maryland Insurance Administration has a hearing scheduled for July 31.

Health insurers warn 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. But a month later a federal judge in New Mexico said it was. The ACA also prohibits insurers from rejecting applicants with pre-existing conditions and from charging older people exorbitantly high rates because they are higher financial risks. If that doesn't happen, some insurers may need to boost their premiums for 2019, she said. "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". Rate filings by CT health insurers for 2019 are due next week. Small insurers often complain about risk adjustment payments because they end up paying their larger competitors, who tend to have the sickest patients.