Trump admin temporarily halting some payments under Obamacare program

Henrietta Brewer
July 10, 2018

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 & Medicaid Services said today that the February action by the trial court in New Mexico "prevents CMS from making further collections or payments under the risk adjustment program, including amounts for the 2017 benefit year, until the litigation is resolved".

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.

Many Trump followers often cheer cuts to Obamacare, not knowing that the Affordable Care Act and Obamacare are one in the same.

The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization.


At stake are billions in payments to insurers with sicker customers. But another district court in MA upheld the formula.

President Donald Trump's administration has used its regulatory powers to undermine Obamacare after the Republican-controlled Congress previous year failed to repeal and replace the law.

"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.

The Trump administration's move "will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", association president Scott Serota said in a statement. 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.

The U.S. agency that administers Obamacare is freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands.


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

Insurance companies responded quickly on Saturday with their disapproval.

Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing. Some insurances have even expanded their presence in states where they were already operating with help from the Affordable Care Act. "There is a need to analyze insurers case-by-case and account for their competitive landscapes", said Tinglong Dai, an associate professor of operations management and business analytics at the Johns Hopkins University Carey Business School.

America's Health Insurance Plans, the main health insurance industry trade group, said in a statement that it is "very discouraged" by the Trump administration's decision to freeze payments.


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