Trump administration halts billions in Obamacare payments to health insurers

Trump administration halts billions in Obamacare payments to health insurers

President Donald Trump's administration is freezing billions of dollars in payments to health insurers under the Affordable Care Act's risk adjustment program.

Nationally, insurance industry officials quickly denounced the Trump administration's move and warned that the decision would drive up premiums.

Without the funds, insurance companies insuring a large number of sick clients may be forced to raise premiums on all clients. "This decision reflects CMS' 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", CMS Administrator Seema Verma said. 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 risk-adjustment program doesn't involve taxpayer money. The idea is to insulate insurance companies from the cost of enrolling people with pre-existing conditions, and remove the incentive for insurance companies to cherry pick healthy people. About $10.4 billion was slated to be transferred previous year.

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The program is critical to markets under the Affordable Care Act because insurers with healthier consumers enrolled in plans reimburse insurers with sicker and more expensive enrollees.

"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals", the trade association said. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance". In a March 2018 ruling out of New Mexico, US District Court Judge Thomas Browning that the methodology used by the federal government was "arbitrary and capricious" and remanded it back to the agency, according to Lexis Legal News.

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"The federal government's decision to suspend payment transfers under the ACA's risk adjustment program could have a significant impact on premiums and place an additional burden on people in the community who can least afford it", CareFirst's president and CEO, Brian Pieninck, said in a statement. New Mexico's ruling alone isn't enough to freeze payments, unless, he says, it's a "politically motivated" move to further disrupt the ACA. However, Republican lawmakers and the Trump administration have made a series of moves meant to weaken the health law, such as halting subsidies that covered some consumers' out-of-pocket costs and eliminating the penalty for not having insurance.

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