United States freezes payments to ACA insurers with sicker patients

Henrietta Brewer
July 11, 2018

"Suspending the Risk Adjustment Program is the Trump administration's latest attempt to do administratively what they couldn't do legislatively: dismantle the Affordable Care Act", he said.

Reuters' characterization of the move is that "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".

Insurance stocks may be a focus in Monday morning's trading.

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.

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

Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing.


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

FILE PHOTO: A man fills out an information card during an Affordable Care Act outreach event hosted by Planned Parenthood for the Latino community in Los Angeles, California September 28, 2013.

It sends funds from insurance plans with low-risk enrollees to higher-risk ones.

CMS plans to appeal the court's ruling, as the U.S. District Court for the District of MA ruled to uphold the payments.

The administration argued in its announcement that its hands were tied by conflicting court rulings in New Mexico and MA.

"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals", the trade association said.


Risk adjustment is an important part of the ACA. The CMS, which noted that a federal court in MA found its formula fair, has asked the New Mexico court to reconsider its decision and said it is seeking a quick resolution to the legal issue. It also negates the fact that those healthy people were not willing participants in the pool until this year.

The Centers for Medicare & Medicaid Services on Tuesday announced steep funding cuts for sign-up assistance through state-based programs called "navigators".

The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. Following the decision, CMS asked the court to reconsider its ruling. The insurers have requested average rate increases for 2019 that range from 18.5 percent to 91.4 percent, depending on the type of plan.

There have been winners and losers in risk adjustment. Instead, the insurer referred to a statement from the Blue Cross Blue Shield Association.

The payments can be controversial, Dai said. Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019. In Maryland, Kaiser usually ends up paying CareFirst.


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