The Trump administration said Saturday that it is temporarily halting billions of dollars of payments created to help insurers meet the Affordable Care Act requirement that they provide coverage regardless of whether a person is healthy or sick. But U.S. District Judge James Browning of New Mexico ruled in February that HHS couldn't use statewide average premiums to come up with its risk-adjustment formula because the agency wrongly assumed the ACA required the program to be budget-neutral.
The Affordable Care Act's (ACA) "risk adjustment" program is meant 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. To do that, the government collects money from health insurers with enrollees who were healthier and as a result "cost less to insure".
In the meantime, some health insurers are potentially out billions of dollars.
Martin Hickey, the founder of New Mexico Health Connections, the state's health care co-op and the company that filed the lawsuit, believes the court ruling will reduce the prices and benefit consumers.
"We were disappointed by the court's recent ruling", CMS Administrator Seema Verma said in the agency's statement.
The New York Times suggested the payment freeze could "increase uncertainty in the markets and drive up premiums this fall".
"People spin the administration's decision as Trump trying to do harm, but it's exactly the opposite", he added. 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.
The suspension of the payments comes amid other efforts by the Trump administration to try to chip away at the landmark health care law.
A federal court in MA upheld the same allocation formula in January. Citing conflicting federal court decisions on the program, the CMS said it can not collect or disburse funds under the risk-adjustment program. "The executive order the president signed, not long after he got to the White House after the [Inaugural] Parade was effectively, 'We're declaring war on the Affordable Care Act.'" Whitlock says, the goal has been to make the marketplace as inhospitable as possible for participating plans, and this is just one more step in that direction.
"As the Exchange has grown in visibility and become more familiar to Americans seeking health insurance, the need for federally funded Navigators has diminished", CMS said in a statement on Tuesday.
Still, insurers are grappling with changes that the Trump administration and Congress have made to Obamacare for 2019. Following the decision, CMS asked the court to reconsider its ruling.