In the latest swipe at the Affordable Care Act, which Trump was unable to repeal in his first year in office, the Centers for Medicare & Medicaid Services on Saturday said it was putting "on hold" its "risk adjustment" program in which it collects money from insurers with fewer high-cost plan members and transfers the funds to insurers with more high-need patients that require more expensive care.
When the Republican-controlled Congress' effort to repeal the ACA died past year, it appeared the law had survived. About 20 million Americans have received health insurance coverage through the program known as Obamacare.
The payments are meant to help stabilise health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017. The payments work this way: The government takes money from insurers with healthier, low-risk customers, and gives it to insurers with less-healthy, higher-risk customers. The administration could just as easily have listened to a judge in MA who ruled the opposite way or awaited the results of an appeal.
The Trump administration on Monday announced another nail in the coffin of Obamacare, declaring it would withhold the payment of risk-adjusted premiums to insurers.
In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments. "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", said CMS Administrator Seema Verma in a statement.More news: Israel Intercepts Incoming Drone from Syria
"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.
The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. All in all, the program was slated to shift $10.4 billion among insurers in 2017, according to the agency. Small health plans also have far less capital than more established insurers to comfortably make large risk-adjustment payments. Earlier this year, the Trump administration proposed to expand short-term junk plans, which are not required to cover people with pre-existing conditions.
Insurers criticized the payment freeze, arguing it harms consumers and will cause turmoil for the insurance industry as they move to finalize their 2019 rates.
As the number of companies offering insurance on the exchanges dwindles - even with the risk adjustment program payments - the efficacy of this program should be thoroughly examined.
The administration's latest effort to undermine the Affordable Care Act comes at a particularly sensitive time for insurers.