Trump administration halts billions of dollars of ACA payments

Credit Kaiser Family Foundation

Credit Kaiser Family Foundation

The Trump administration's abrupt suspension of billions of dollars in payments to ObamaCare insurers has prompted new warnings of rising premiums as health companies scramble to adjust.

The Centers for Medicare and Medicaid Services (CMS), the agency that oversees the program, cited a recent federal court decision that found the formula for calculating the risk adjustment payments to be flawed.

CMS cites the late February court ruling in deciding to place a freeze on the $10.4 billion which it collected past year, and which ordinarily would be dispersed among high-risk insurers.

The announcement came as insurers were awaiting an annual report that usually comes at the end of June, informing them of whether they owe money into the risk adjustment program or will be paid out for the previous year.

"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", she said. But another district court in MA upheld the formula.

She noted it is the latest action by the administration of President Donald J. Trump, which has weakened the landmark law that expanded healthcare for many more Americans.

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"When the rules of the game change after the fact - insurers don't necessarily see the federal government as a particularly reliable partner right now", Levitt says. The Trump administration claims it is obligated to suspend these payments because of a court ruling out of New Mexico questioning their legality, but there is reason to be skeptical.

"We were disappointed by the court's recent ruling," CMS Administrator Seema Verma said in a statement.

"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 main insurance trade associations in Washington have been organizing calls with their member companies and trying to coordinate a response.

About 20 million Americans have received health insurance coverage through the program.

More: Health care will define the midterms. Overall, the momentum has been positive, with numerous major insurers following the broader market's upward momentum. Earlier this year, the Trump administration proposed to expand short-term junk plans, which are not required to cover people with pre-existing conditions.

"It has caused insurer collapses and market exits that reduced competition".

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