Government will resume risk payments to insurers
The federal WASHINGTON — government, in an abrupt reversal, said Tuesday that it would restart a program that pays billions of dollars to insurers to stabilize health insurance markets under the Affordable Care Act.
The Trump administration suspended the program less than three weeks ago, saying it was compelled to do so by a federal court decision in New Mexico.
But the administration said Tuesday that it would restore the program because otherwise health plans could become insolvent or with- draw from the market, causing chaos for consumers.
In adopting a new rule, the administration essentially accepted the arguments of critics, including consumer groups, health insurance companies and Democrats in Congress, who said that suspending the payments would cause turmoil in insur- ance markets.
The program, known as risk adjustment, makes payments to insurers that enroll higher-risk people, such as those with chronic condi- tions. The money comes from insurers that enroll healthier people. The purpose of the cash transfers is to reduce incentives for insurers to avoid sicker patients.
Seema Verma, the administrator of the Centers for Medicare and Medicaid Ser- vices, issued the new rule on Tuesday, which she said would “restore operation of the risk adjustment program and mitigate some of the uncertainty caused by the New Mexico litigation.”
Health plans that had “expressed concerns about having to withdraw from markets or becoming insol- vent should be assured by our actions today,” Verma said. “Alleviating concerns in the market helps to protect consumer choices.”
Payments will resume around Oct. 22, the Department of Health and Human Services said in the new rule.
“Taking immediate action to allow for the continued oper- ation of the risk adjustment program is imperative to maintain stability and predictabil- ity in the individual and small group health insurance mar- kets,” the department said.
If payments are not made, it said, “there is a serious risk” that insurers will sub- stantially increase premiums in 2019 to make up for the loss. The higher premiums could make coverage unaffordable for some consumers, especially those who do not qualify for subsidies, it said.
Insurers are now deciding whether to participate in the marketplace in 2019 and setting the rates and benefits of the plans they intend to offer next year.
Republicans in Congress, afraid of being blamed in the midterm elections this year for even higher premiums, had urged the Trump administration to resume the payments to insurers.
In February, Judge James O. Browning of the U.S. District Court in Albuquerque voided the formula used by the federal government to calculate risk adjustment payments under the Affordable Care Act. He said the formula was flawed because federal officials “assumed erroneously” that collections and payments had to offset each other.
The Trump administration said Tuesday that it would use the exact same formula for the next round of risk adjustment payments. But it provided a fuller explanation of its method of calculating the payments, as Browning had requested.
The administration did not change the formula to address the substantive concerns of the judge or the insurance company that filed the lawsuit, New Mexico Health Connections. So it is unclear whether they will be satisfied with the administration’s move.
Dr. Martin E. Hickey, the founder of New Mexico Health Connections, said he was “not surprised” by the administration’s action, but he declined to say how the company might respond. The case is still pending before Browning.
Insurers are now deciding whether to participate in the marketplace in 2019 and setting the rates and benefits of the plans they intend to offer next year.