Insurers warn of rising premiums after Trump axes Obamacare payments again

Credit Kaiser Family Foundation

The Trump administration has taken an axe to the Affordable Care Act, suspending a program that was set to pay $10.4 billion to insurers for covering high-risk individuals previous year.

In February, U.S. District Judge James Browning in Albuquerque, N.M., ruled that the formula used by CMS to calculate payments in the risk-adjustment program was flawed and had not been adequately justified by federal regulators.

The court's ruling bars the agency from collecting or making payments under the current methodology, which uses a statewide average premium, said CMS, which is part of the Department of Health and Human Services.

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 ones, according to Reuters.

At stake is more than $10 billion in "risk adjustment" payments - a feature of the 2010 health law that requires insurers with healthier consumers to reimburse plans that end up with costlier, sicker patients, so the market balances out.

The move is expected to add to premium increases next year. "And costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.

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David Anderson, a health policy researcher at Duke University, said the administration's latest move could lead to "more hassle, more aggravation, more frustration for insurers trying to make this market work".

"We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act's (ACA) risk adjustment program, which is created to keep costs down for consumers while meeting the medical needs of those requiring significant care", President and CEO Scott Serota said in a statement. Insurers say, the timing of the decision could mean higher premiums for millions of individuals and small businesses next year.

The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization. The goal is for insurers to compete based on the value of their plans, not just attempting to attract healthier customers.

"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.

Republicans made this argument once before, claiming that the individual mandate for consumers to buy health insurance is unconstitutional.

It also comes as insurers appeared to be warming back up to the ACA. Insurers were entering or returning to at least a dozen states for 2019 enrollment, while others were expanding their presence in the states in which they operate.

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