Insurers Warn of Market Uncertainty After Trump Axes Obamacare Payments
WASHINGTON — July 9, 2018
So-called risk adjustment payments protect insurers from large losses. Medical plans do not include taxes, but only insurance funds at a high cost.
In 2017, this type of insurance under Obamacare cost around $10.4 billion. At present, there are nearly 20 million Americans who received health insurance under this program.
Health insurers think that the Trump administration's decision to temporarily suspend the program which pays insurers to cover high-risk individuals could drive up premium costs and create marketplace uncertainty.
It is probable that President Donald Trump's administration will attempt to undermine the Affordable Care Act’s (ACA) entirely.
America’s Health Insurance Plans (AHIP), a trade group representing insurers ' interests, said the “new market disruption” would create more uncertainty and ultimately drive up premiums for many health-care plans.
“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,” AHIP said in a statement.
“This decision comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates,” said Eric Hillenbrand, a managing director at consulting agency AlixPartners. “This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own.”
The Centers for Medicare and Medicaid Services (CMS) claim that a New Mexico court has frozen these payments because they are based on erroneous rules. A Massachusetts' court upheld them, but the Trump administration has nonetheless stopped the payments.
“As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold,” CMS administrator Seema Verma said, adding in the CMS statement that the administration has asked the court to reconsider the ruling. Another federal court earlier this year upheld the formula.
But supporters of the ACA have criticized the CMS announcement as the latest move by the Trump administration to undermine Obamacare. They said even a temporary, uncertain pause could be damaging.
"No one ever thinks it could also encourage more insurers to bow out of Obamacare," said Brad Woodhouse, the executive director of Protect Our Care, a progressive group that supports Obamacare.
“We urge the Trump administration to back off of this dangerous and destabilizing plan, and instead begin working on bipartisan solutions to make coverage more affordable,” he added.
The administration has made several other moves in recent years to scale back or halt implementation of certain aspects of the ACA.
Late last year, the Trump administration said it would halt so-called cost-sharing payments, which offset some out-of-pocket healthcare costs for low-income patients.
It has also scaled back the advertising budget for Obamacare healthcare plans during the open-enrollment period by about 90 percent.
“What you are effectively doing is dismantling pieces of [the ACA] without replacing them,” Hillenbrand said. “It moves us back to some extent to the status quo where people with pre-existing conditions found it very difficult to get insurance.”
Ordinary Americans are asking themselves the same questions that medical experts are asking: how should these innovations be used?
"My son has already been told his premium is going to TRIPLE next year. BTW, he also has a pre-existing so I can’t wait till that gem kicks in. Why doesn’t the GOP want people to have inexpensive, quality healthcare?" said Carolyn Bass, expressing her indignation.
Andy Slavitt, who headed CMS during the Obama administration, wrote on Twitter that since the funds will eventually be paid, no insurers should withdraw from the markets or overreact in the meantime.
“The administration should react and address quickly so as not to precipitate a crisis,” Slavitt wrote.
The Affordable Care Act had three programs intended to incentivize health insurers to cover individuals with pre-existing and chronic conditions by collecting money from insurers with relatively healthy enrollees to offset the costs of other insurers with sicker ones. The other two programs expired after three years, but the risk adjustment program is supposed to be permanent under the statute.