Insurers rely on the funding, which serves as a backstop for those who wind up with a high share of costly enrollees.
In the short term, $10.4 billion in payments tied to the 2017 benefit year, which were scheduled to go to health insurance companies, will not be paid. The industry warned that the government's failure to make the payments would likely push up premium rates on 2019 plans.
BlueCross in Tennessee lost more than $500 million on its individual plans under Obamacare in the first three years of the program, but the insurer said it earned $117 million last year and expected to be profitable again this year. The other two, which were created to last only three years, ended after 2016. This decision to freeze billions of dollars of payments to health insurers hurts families in New Mexico and undermines their ability to access affordable health care.
In justifying the cuts, CMS said the program is an "established marketplace" heading into its sixth year, so many people are more familiar with it. Eligible organizations include small businesses, local chambers of commerce, trade associations, and other community groups.
The administration, however, was not compelled to halt the payments on the basis of this ruling.
But in January, in a separate case, a federal district judge in MA upheld the government formula used to calculate the payments.
In addition to encouraging private insurers to shun less healthy people, it will raise premiums.
But CareFirst and Kaiser could ask to adjust their rates higher given the Trump administration's decision. This gets into the business of insurance products, and that is the bailiwick of agents and brokers.
Two Rochester-area insurance providers, Excellus BlueCross BlueShield and MVP Health Care, said it's too early to know how the suspension of the federal program will affect their customers. Removal of the tax penalty rendered the individual mandate unenforceable. "It enables the country to move away from a market where plans compete to avoid covering or charge more to people with preexisting health conditions, to one where competition is based on quality, affordable care for everyone". Pregnancy could be one of these.
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 instituted by Democratic President Barack Obama. So-called association health plans do not need to follow the rules for policies sold under the ACA, which means they do not need to provide coverage for services deemed "essential" by the ACA.
She noted it is the latest action by the administration of President Donald J. Trump, which has weakened the landmark law that expanded healthcare for many more Americans. The administration is also pushing to broaden the definition of short-term insurance, which is also exempted from the ACA's rules.
Whatever happens with the risk adjustment payments, it looks as if many exchange consumers will be left to figure out their options for 2019 on their own. But next year, ACA navigators - the trained instructors who explain health benefits and help people enroll - will be harder to find as a result of federal funding cuts. Until now, the grants have been used only to help people choose and buy ACA health plans or to help steer people with low incomes toward Medicaid. That's because many ACA customers will qualify for federal government premium subsidies, which are still alive and well in Obamacare.
Seema Verma, administrator of the Centers for Medicare and Medicaid Services, listens during a meeting on healthcare reform at the White House. "They're just strangling the program".
To fully understand the administration's latest move, a little history is in order.