Freezes billions

Trump administration freezes billions in Obamacare payments, outraging advocates

By POLITICO STAFF

The Trump administration is freezing billions of dollars of payments to Obamacare health insurers, another blow to the fragile markets as health plans begin to set premiums and get ready for the next enrollment season.

The so-called risk adjustment payments are supposed to protect insurers from big losses. The health plans pay into a pool — this doesn’t involve tax dollars — and funds are transferred to insurers that ended up with many high cost patients. In 2017, $10.4 billion was involved.

The Centers for Medicare & Medicaid Services said in a statement over the weekend it was halting the decision after a federal district court in New Mexico decided in February the payments were based on flawed rules. It also said it would appeal — particularly because another court in Massachusetts upheld the payments.

“CMS is seeking a quick resolution to the legal issues raised and will inform stakeholders of any update to the status of collections or payments at an appropriate future date,” the agency said in a statement.

But insurers said even a temporary, uncertain pause is damaging, and political opponents of the Trump administration took to Twitter to say decision is part of a pattern of Republican attempts to sabotage Obamacare, after failing to repeal it.

The trade group America’s Health Insurance Plans said the “new market disruption” would create more uncertainty and drive up premiums for many health plans.

“This decision comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates,” the group said in a statement. “This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own.”

Blue Cross Blue Shield Association President and CEO Scott Serota said the administration has the legal justification needed to move forward with the payments regardless of the New Mexico ruling.

“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 top Democrat on the House Energy and Commerce Committee, Rep. Frank Pallone (D-NJ), said the administration's move was “smoke and mirrors“ — and illegal.

“By refusing to make risk adjustment payments, the Trump Administration is breaking the law,” he said in a statement Sunday evening “This is a malicious and intentional attack on our health care system and on Americans’ access to health insurance, plain and simple.“

Andy Slavitt, who headed CMS during the Obama administration, wrote on Twitter that since the funds will eventually be paid, no insurers should withdraw from the markets or overreact in the meantime.

“The administration should react and address quickly so as not to precipitate a crisis,” Slavitt wrote.

The Affordable Care Act had three programs aimed at reducing insurers’ risk as they entered uncertain new markets. The other two programs expired after three years, but the risk adjustment program is supposed to be permanent under the statute.