Health insurers warn that a move by the Trump administration on Saturday to temporarily suspend a program that was set to pay out $10.4 billion to insurers for covering high-risk individuals a year ago could drive up premium costs and create marketplace uncertainty.
In February, U.S. District Judge James Browning in Albuquerque, N.M., ruled that the formula used by CMS to calculate payments in the risk-adjustment program was flawed and had not been adequately justified by federal regulators.
"We were disappointed by the court's recent ruling".
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 enrollees.
The Wall Street Journal was the first to report the expected suspension of the payments. The Trump administration says it's freezing payments under an Obamacare program that protects insurers with sicker patients.
The CMS statement said the agency will "provide additional guidance shortly on how it will handle other issues relating to risk adjustment payments".
The New York Times suggested the payment freeze could "increase uncertainty in the markets and drive up premiums this fall". "This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own. And costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said. It's a move that could shake up insurance markets.
"We urge the Trump administration to back off of this unsafe and destabilizing plan, and instead begin working on bipartisan solutions to make coverage more affordable", said Brad Woodhouse, the executive director of Protect Our Care, a progressive group that supports Obamacare.
"This action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", Serota said in a statement. "It will undermine Americans' access to affordable coverage, particularly those who need medical care the most".
The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization. To do that, the government collects money from health insurers with enrollees who were healthier and as a result "cost less to insure".
Trump and his team have continued to argue that the individual mandate is unconstitutional and has promised to refuse to defend any parts of Obamacare in court.