Administration Suspends Billions in Payoffs to Obamacare Insurers | Trending

Henrietta Strickland
July 11, 2018

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

Trump administration officials said they were forced to make the cuts after a federal court in New Mexico ruled in February that the formula for calculating risk adjustment could not use a statewide average premium. Unlike with other ObamaCare subsidy programs, risk adjustment payments shuffle money from insurers with relatively healthy populations to others.

The risk-adjustment program, which does not cost taxpayers any money and is required by law, is created to ensure that health care coverage is available for sicker, higher-cost patients by sharing the cost of covering them.

While some may say this means no government money is involved, this ignores the concern expressed in the New Mexico court decision.

CMS said it was "disappointed" by that decision and asked the judge to reconsider, which tends to be faster than the appeals process. 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. "It will allow more companies to get into the insurance market". In other words, the Trump Administration position in court is in favor of making the payments.

However, the trade group America's Health Insurance Plans (AHIP) said in a statement that the recent move would lead to uncertainty and increase premiums, putting the burden on small businesses and consumers.

"We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", AHIP stated. It added that the move comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates.

CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it.

"Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare".

"As the Exchange has grown in visibility and become more familiar to Americans seeking health insurance, the need for federally funded Navigators has diminished", CMS said in a statement on Tuesday. But the U.S. Supreme Court upheld the law, finding that the fine consumers faced for not buying insurance was actually a tax.

The Republican Congress tried to repeal the Affordable Care Act at every turn in 2017 and now they are trying to take away the protection it provides for people with pre-existing conditions.

Other reports by Click Lancashire

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