Insurance companies waiting for $10.4 billion they were expecting from the federal government thanks to Obamacare will have to wait a little longer, now that the Trump administration has stopped the so-called “risk adjustment payments.”
The Centers for Medicare and Medicaid Services announced Saturday that it was halting the payments, Reuters reported.
The payments are designed to compensate insurance companies that took on consumers with costlier health care problems during 2017. The money comes from companies that insured healthier Americans.
CMS Administrator Seema Verma said in a statement that the payments were stopped because a New Mexico court ruling said the formula for allocating payments was flawed.
The action drew howls of protest.
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“Risk adjustment is a mandatory program under federal law,” said Scott Serota, president of the Blue Cross Blue Shield Association, according to The Washington Post.
“Without a quick resolution . . . this action will significantly increase 2019 premiums for millions of individuals and small business owners. . . . It will undermine Americans’ access to affordable coverage, particularly for those who need medical care the most.”
Matt Eyles, president of America’s Health Insurance Plans, said the decision will affect which companies participate in Obamacare marketplaces for 2019 and what rates they will charge.
“This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own,” he said in a statement.
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“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. And costs for taxpayers will rise as the federal government spends more on premium subsidies,” he said.
As it is, many insurers are looking at double-digit premium increases for 2019, CNN reported.
Although the Trump administration has sought to end Obamacare, Verma laid the payment stoppage at the court’s door.
“We were disappointed by the court’s recent ruling. As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold. CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets,” she said, according to ABC.
However, Trump’s critics said the ruling was the administration’s fault.
“The Trump administration just keeps pushing their destructive repeal-and-sabotage agenda, no matter the cost to the American people,” said Brad Woodhouse, the director of the advocacy group Protect Our Care, The New York Times reported. “Following through with this latest act of sabotage could raise rates for all consumers even more.”
The company that brought the lawsuit that forced an end to the payment programs said that despite the rhetoric, consumers will benefit in the long run.
“The risk adjustment formula was extremely biased in favor of large, established insurers and discriminated against new and small insurers, including co-ops like ours,” Dr. Martin E. Hickey, founder of New Mexico Health Connections, told The New York Times.
“People spin the administration’s decision as Trump trying to do harm, but it’s exactly the opposite,” Hickey said. “It will allow more companies to get into the insurance market. That will increase competition, and competition will help keep prices down.”
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