The Atlanta Journal-Constitution
White House takes steps to further dismantle ACA
The White WASHINGTON — House halted billions of dollars in annual payments required under the Affordable Care Act to even out the cost to insurers whose customers need expensive medical services.
In a rare Saturday afternoon announcement, the Centers for Medicare and Medicaid Services said it will stop collecting and paying out money under the ACA’s “risk adjustment” program, drawing swift protest from the health insurance industry.
Federal health officials are required each year to calculate which insurers with relatively low-cost consumers must chip in to a fund, and which ones with more expensive customers are owed money. This idea of pooling risk has had significant practical effects: encouraging insurers to participate in the insurance marketplaces the ACA created for Americans who cannot get affordable health benefits through a job.
In its announcement, CMS said that it is not going to make $10.4 billion in payments that are due to insurers in the fall for expenses incurred by insurers last year.
CMS, a branch of the Department of Health and Human Services that oversees much of the law, is supposed to issue an annual report on the program but has not released a report that was due late last month.
The suspension of these payments is the most recent action by the administration to change the healthcare law that President Donald Trump has vowed since his campaign to remove. A Republican-led Congress last year failed to repeal much of the ACA. The administration has been taking steps to dismantle it through executive powers.
Last year, health officials halved the length of the annual sign-up period for Americans to buy ACA health plans and cut by 90 percent the federal funds for advertising and other outreach efforts to urge people to enroll. Last October, the president ended another important subsidy to insurers: cost-sharing reduction payments, which cushioned them from the law’s requirement to provide discounts on deductibles and other out-of-pocket costs to low-income customers.
The five-paragraph statement plus a timeline issued on Saturday justified the latest action by tying it to a legal dispute over the fairness of the risk-adjustment formula. The dispute goes back about three years to a new type of nonprofit insurer, known as Consumer Oriented and Operated Plans (co-ops), created by the ACA as alternatives to traditional insurance companies. Most of the co-ops found themselves in such fragile financial condition that they closed, and a few that have survived sued the government, alleging they were unfairly making contributions into the risk-adjustment fund while larger, better-established insurers were receiving payments.
In two cases, federal district judges in Massachusetts and New Mexico reached opposite conclusions. The Massachusetts judge found the HHS formula fair, but the judge in New Mexico ruled that it was “arbitrary and capricious.” Federal health officials are asking that the New Mexico ruling be reconsidered.
The announcement says that “ruling prevents CMS from making further collections or payments under the risk adjustment program.” CMS Administrator Seema Verma said: “As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”
Two major insurers’ trade groups immediately criticized the move.
“Risk adjustment is a mandatory program under federal law,” said Scott Serota, president of Blue Cross Blue Shield Association. “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.”
Matt Eyles, president of America’s Health Insurance Plans, noted in a statement that the timing of this latest move could be particularly disruptive. “This decision...will create more market uncertainty and increase premiums for many health plans,” Eyles said.