Trump administration guts grants to help those in need get Obamacare

Faith Castro
July 11, 2018

The risk-adjustment payments - from insurance companies with a majority of healthy clients to those companies insuring people with chronic illnesses - were written into the Affordable Care Act (ACA) as a way to stabilize the system. Citing conflicting federal court decisions on the program, the CMS said it can not collect or disburse funds under the risk-adjustment program.

This risk adjustment program was created to "stabilize" the insurance markets by making sure that there were several companies in each market vying for customers, thus theoretically keeping premiums reasonable.

The risk adjustment program plays an important role in the ACA by pooling risk for insurers, transferring funds from insurers who enroll healthier members for relatively less, to those that take on higher costs in order to enroll sicker members.

Nationally, insurance industry officials quickly denounced the Trump administration's move and warned that the decision would drive up premiums. While the administration says it is required to stop payments because of the court decision, insurers say the move could result in higher premiums for millions of individuals and small businesses.

"Without a quick resolution to this matter, this action will significantly increase 2019 premiums for millions of individuals", the trade association said. As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold. Legacy insurers that have a wealth of patient data may have a leg up on coding.

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.

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The administration argued in its announcement that its hands were tied by conflicting court rulings in New Mexico and MA. This is the second round of cuts, after CMS reduced funding for navigators by 41 percent, from $62.5 million, last August, and also cut the budget for Obamacare outreach and advertising by 90 percent.

In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.

Navigators and other advocates push back on that claim, saying that navigators help enroll some of the people who most need help, such as those who don't speak English well or those in rural areas. "So it seems like an extreme step to halt this program nationally based on a decision by one district court judge".

The Center for Medicare and Medicaid Services (CMS) has suspended payments to health insurers with a large number of sick Obamacare clients.

Rumors that the Trump administration would freeze payments were circulating late last week.

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