United States freezes payments to ACA insurers with sicker patients
United States freezes payments to ACA insurers with sicker patients
Justin Sullivan Getty Images North America
11 July, 2018, 07:04
The risk adjustment program redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees.
"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". The idea is to insulate insurance companies from the cost of enrolling people with pre-existing conditions, and remove the incentive for insurance companies to cherry pick healthy people. While the administration says it is required to stop payments because of the court decision, insurers say the move could result in higher premiums for millions of individuals and small businesses.
"An effective risk adjustment program is crucial to the sound operation of a health insurance marketplace in which individuals, families and small businesses with health needs have access to more affordable, high-quality coverage", said Bill Wehrle, Kaiser Permanente vice president of health insurance exchanges, in a statement.
This is distinct from the debate over ObamaCare's cost-sharing payments, which the Trump Administration cut off past year after a federal judge barred the subsidies that Congress had not appropriated.
The move should not have been unexpected given the administration's disdain for other provisions of the Affordable Care Act (ACA), leading to the elimination of other key taxpayer-funded subsidies and the outright eradication of the individual mandate through this past winter's tax cut legislation. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS Administrator Seema Verma said.
"So much uncertainty put in the market at this point of time is very unnerving", said Ritu Agarwal, senior associate dean of research at the University of Maryland Robert H. Smith School of Business, who follows the health care system.
The news comes on the heels of manypredicting better days for insurers in the ACA markets. "This is one of several steps the Trump administration has taken to undermine the ACA".
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