The Trump administration said Saturday it's freezing payments under an "Obamacare" program that protects insurers with sicker patients from financial losses, a move expected to add to premium increases next year.
The Centers for Medicare and Medicaid Services said it had to put the payments on hold, after a US district court judge ruled the government arrived at the formula that guides the payouts in a flawed way. All in all, the program was slated to shift $10.4 billion among insurers in 2017, according to the agency.
The Blue Cross Blue Shield Association, whose members are a mainstay of Affordable Care Act coverage said it was "extremely disappointed" with the administration's action. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS administrator Seema Verma reportedly said in a statement.
The main insurers' lobby said it will need to see a quick resolution to avoid bigger price hikes next year - and a bigger tab for taxpayers who subsidize qualified customers in the program's web-based exchanges.
CMS plans to appeal the court's ruling, as the U.S. District Court for the District of MA ruled to uphold the payments.
More broadly, the move contributes to a string of actions from the Trump administration, including the cancellation of other ObamaCare payments a year ago, that have added to insurers' uncertainty and frustration.
"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. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance". The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved.
The CMS said a February federal court decision in New Mexico, which ruled it was using a flawed formula to determine its collections and payments amounts, prevented it from continuing the program.
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It could encourage more insurers to bow out of the Affordable Care Act. Eventually, experts say, some insurers could simply get fed up and exit ObamaCare markets, leading to fewer choices for consumers.
But since the Trump Administration removed the fine for not buying health insurance, Republicans argue that the removal of the threat of that "tax" now makes the law unconstitutional.
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