Trump admin temporarily halting some payments under Obamacare program

Trump admin temporarily halting some payments under Obamacare program

The Trump administration said on July 7 that it would temporarily suspend some payments to health insurers under the Affordable Care Act's (ACA) risk adjustment program, in light of a ruling earlier this year by a federal district court in New Mexico.

"This is occurring right at the time of year that people (insurers) are making decisions about whether to participate in the exchanges and what premiums to charge if they do", said Eric Hillenbrand, a managing director at consultancy AlixPartners.

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America's Health Insurance Plans, the trade organization representing health insurers, issued a statement saying it was "discouraged" by the decision to freeze risk adjustment payments.

President Donald Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress past year failed to repeal and replace the law propelled by Democratic President Barack Obama.

"The Trump administration just keeps pushing their destructive repeal-and-sabotage agenda, no matter the cost to the American people", Brad Woodhouse, the director of Protect Our Care, an advocacy group that supports Obamacare, stated in the New York Times report. Through the program, roughly 20 million Americans have received health care coverage.

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For years, Molina and other insurers have complained that the risk-adjustment program unfairly rewarded many Blue Cross Blue Shield plans that had excess administrative costs and higher premiums.

A federal court in MA upheld the same allocation formula in January.

Levitt says the administration's announcement was "a little perplexing", given that the legal fight over the conflicting rulings in New Mexico and MA is still ongoing. "It will create more market uncertainty and increase premiums for many health plans-putting a heavier burden on small businesses and consumers, and reducing coverage options".

In a separate statement, the CMS said it was "disappointed" by the court's ruling, adding that "billions of dollars in risk adjustment payments and collections are now on hold".

CMS officials did not say how long the suspension would last or what would cause payments to be restored. It's a move that could shake up insurance markets. The fund would be separate from the federal risk adjustment payments and could allow the insurers to reduce their requested rate increases by as much as 30 percent.

These moves are prompting some insurers to request premium hikes for 2019 in the double digits. "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. "Cutting such payments achieves the opposite effect". In Maryland, Kaiser usually ends up paying CareFirst.

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