Stopping ACA Risk Payments

Terry H. Schwadron

July 9, 2018

Will the Trump administration never end its attacks on health care? Apparently not, since a weekend decision by the Centers for Medicare and Medicaid Services took another negative step by saying it will stop collecting and paying out money under the “risk adjustment” program to ensure health care is offered in all areas.

The payments — $10.6 billion in all — are meant to even out the cost to insurers whose customers need expensive medical services.

In general, these payments are aimed at ensuring that more extensive insurance is offered without financially hurting insurers.

Thisfreeze that could increase uncertainty in the markets and drive uppremiums this fall because many insurance companies enrolling large numbers of unhealthy people depend on these risk adjustment payments.

The alternative is that insurers simply offer only cheaper plans that eliminate patients with chronic illnesses and other pre-existing conditions, those who need health care the most.

Trump administration officials said they decided to suspend payments under the program because of a ruling in February in Federal District Court in New Mexico. The judge tossed out the formula used to calculate payments, finding that it was flawed.

Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, explained that “as a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold,” adding that her agency had asked the court to reconsider its ruling and was hoping for a prompt resolution of the issue, to “prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets.”

Whatever the reason, it is part of the never-ending campaign to undermine the Affordable Care Act or Obamacare. Previous attempts have included eliminating mandatory purchase of health insurance, halving the time for enrollment in the programs, and various administrative moves to trim federal commitments, including advice that insurance companies can ignore requirements for coverage of pre-existing health conditions for individuals.

For Republicans, the issue is one of individual rights. Indeed, Republican candidates have vowed to try once again after presumably positive results in the November elections to eliminate Obamacare altogether. For Democrats, the retention of Obamacare as the basis of a federal health care law is front of mind. In any event, Republicans have not produced any alternative to offer. President Trump has simply made Obamacare an evil to be uprooted without providing more information what will replace it.

This move comes just as insurance companies are developing premiums for 2019 and states are reviewing proposed rates. Various experts have suggested the moves will result in higher costs for citizens to pay for health insurance.

Premium subsidies for low- and moderate-income people will continue.

A court decision in February, by Judge James O. Browning, voided the formula used by the federal government to calculate risk adjustment payments each year from 2014 to 2018. The payments shuffle money among insurers, from those with healthier customers to those with less healthy members who have a higher risk of using costly medical care. A judge in Massachusetts had upheld the formula.

A sub-argument here is whether these risk payments favor the larger insurance companies over smaller, newer companies since the formulas reflect past usage of health insurance.

The announcement basically favors the development of smaller, newer efforts for co=-operatives and other alternatives to insurance companies.

Two major insurers’ trade groups immediately decried the move. “Risk adjustment is a mandatory program under federal law,” Scott Serota, president of the Blue Cross Blue Shield Association, said. “Without a quick resolution . . . this action will significantly increase 2019 premiums for millions of individuals and small business owners. . . . It will undermine Americans’ access to affordable coverage, particularly for those who need medical care the most.” Matt Eyles, president of America’s Health Insurance Plans, noted in a statement that the timing of this latest move could be particularly disruptive, because this is the season during which insurers around the country decide whether to take part in ACA marketplaces for 2019 and, if so, what rates to charge. “This decision . . . will create more market uncertainty and increase premiums for many health plans,” Eyles said.

However you slice it, health care just became more difficult to obtain, more expensive, more limited with the costs headed directly for the consumers. Let’s Make America Healthy Again.

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