The Trump administration is halting billions of dollars of payments to insurers under the Affordable Care Act's risk-adjustment program, a move that further disrupts the insurance market and could lead to more premium increases next year. Citing conflicting federal court decisions on the program, the CMS said it can not collect or disburse funds under the risk-adjustment program.
At stake is more than $10 billion in "risk adjustment" payments - a feature of the 2010 health law that requires insurers with healthier consumers to reimburse plans that end up with costlier, sicker patients, so the market balances out.
America's Health Insurance Plans (AHIP), a national association representing health insurers, said in a statement that it was "discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", adding that it will "create more market uncertainty".
"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals and small-business owners and could result in far fewer health plan choices", Scott Serota, president and CEO of The Blue Cross Blue Shield Association, said in a statement.
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: Health care will define the midterms. "And costs for taxpayers will rise as the federal government spends more on premium subsidies".
It also comes as insurers appeared to be warming back up to the ACA. "This is one of several steps the Trump administration has taken to undermine the ACA".
Indeed, a series of actions by the administration have undermined the ACA.
The court's ruling bars the agency from collecting or making payments under the current methodology, which uses a statewide average premium, said CMS, which is part of the Department of Health and Human Services. However, under Obamacare, insurance companies can not charge higher premiums, or even deny coverage, to clients with pre-existing conditions.
President Donald Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress previous year failed to repeal and replace the law propelled by Democratic President Barack Obama. These include eliminating the individual mandate penalty and broadening the availability of two alternatives to Affordable Care Act policies. "Following through with this latest act of sabotage could raise rates for all consumers even more - on top of the rate hikes they have already caused - and is without a doubt an escalation in the Trump administration's war on people with pre-existing conditions".
The administration is taking legal steps to challenge the ruling in New Mexico, says Levitt.