The Centers for Medicare & Medicaid Services announced over the weekend that it was freezing billions of dollars in so-called risk adjustment payments for plans under the Affordable Care Act, also known as Obamacare, because of a court decision earlier this year that deemed the formula for determining these payments unlawful.
"We were disappointed by the court's recent ruling", CMS Administrator Seema Verma said in the agency's statement.
The risk adjustment program plays an important role in the ACA by pooling risk for insurers, transferring funds from insurers who enroll healthier members for relatively less, to those that take on higher costs in order to enroll sicker members. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance". 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. But the U.S. Supreme Court upheld the law, finding that the fine consumers faced for not buying insurance was actually a tax. One reason could be that newer insurers have limited information on their members' health status and claims history.
Insurance companies responded quickly on Saturday with their disapproval.
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.
For the past five years, when insurance has been available through ACA marketplaces for people who do not have access to affordable health benefits through a job, federal health officials have started every spring working with navigator groups on plans for the coming enrollment season.
"Insurers hate uncertainty, and when faced with it tend to raise premiums to hedge their bets", says Larry Levitt, Senior Vice President at the Kaiser Family Foundation.
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While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said.
"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. Health law experts are...
But to Rodney Whitlock, Vice President of Health Policy at ML Strategies and former Republican congressional aide, it's not perplexing at all.
"What you have to keep in mind is ultimately the intent of the administration", Whitlock says.
The mainstream media report offered more criticism from supporters of the Affordable Care Act.
The Trump administration has halted billions of dollars of Obamacare payments to insurers due to a court ruling.