The Trump administration said Saturday that it was suspending $10.4 billion in payments expected by Obamacare insurers, citing a federal judge's ruling in a lawsuit over a program's formula guidelines. The ruling barred Centers for Medicare and Medicaid Services (CMS) from making further collections or payments under the program, including amounts for the 2017 benefit year, until the litigation is resolved.
In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.
"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.
CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it.
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Risk adjustment is a key aspect of market stabilization under the ACA, also known as Obamacare.
America's Health Insurance Plans, the main health insurance industry trade group, said in a statement that it is "very discouraged" by the Trump administration's decision to freeze payments.
Health insurers say it is a move that could drive up premium costs and create marketplace uncertainty. The payments work this way: The government takes money from insurers with healthier, low-risk customers, and gives it to insurers with less-healthy, higher-risk customers.
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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. "CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets".
Insurance companies responded quickly on Saturday with their disapproval.
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.
It could also encourage more insurers to bow out of Obamacare. The insurers have requested average rate increases for 2019 that range from 18.5 percent to 91.4 percent, depending on the type of plan.
The Trump administration has halted billions of dollars of Obamacare payments to insurers due to a court ruling.
"It has caused insurer collapses and market exits that reduced competition".
The payments can be controversial, Dai said.