Trump admin shocks insurers
Obamacare takes new hit in payments row
WASHINGTON: President Donald Trump’s administration said on Saturday it’s freezing payments under an “Obamacare’’ programme that protects insurers with sick patients from financial losses, a move expected to lead to increase in premiums.
At stake are billions in payments to insurers with sicker customers. In a weekend announcement, the Centres for Medicare and Medicaid Services said the administration is acting because of conflicting court ruling in lawsuits filed by some smaller insurers who question whether they are being fairly treated under the programme.
The so-called “risk adjustment’’ programme takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees. Payments for 2017 are US$10.4 billion. No taxpayer subsidies are involved.
The idea behind the programme is to remove the financial incentive for insurers to “cherry pick’’ healthier customers. The government uses a similar approach with Medicare private insurance plans and the Medicare prescription drug benefit.
Major insurer groups said the administration’s action interferes with a program that’s working well.
The Blue Cross Blue Shield Association, whose members are a mainstay of Affordable Care Act coverage said it was “extremely disappointed’’ with the administration’s action.
Mr Trump’s move “will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices,’’ association president Scott Serota said. “It will undermine Americans’ access to affordable coverage, particularly those who need medical care the most.’’
Mr Serota noted the payments are required by law, and said he believes the administration has the legal authority to continue making them despite the court cases. He warned of “turmoil’’ as insurers finalise their rates for 2019.
America’s Health Insurance Plans, the main health insurance industry trade group, said in a statement that it is “very discouraged’’ by Mr Trump administration’s decision to freeze payments.
“Costs for taxpayers will rise as the federal government spends more on premium subsidies,’’ the group said.
Rumours that Mr Trump’s administration would freeze payments were circulating late last week. But the Saturday announcement via email was unusual for such a major step. The administration argued in its announcement that its hands were tied by conflicting court rulings in New Mexico and Massachusetts.
Medicare and Medicaid Administrator Seema Verma said that Mr Trump’s administration was disappointed by a New Mexico court ruling that questioned the workings of the risk programme for insurers. The administration “has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows (the government) to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets,’’ she said.
More than 10 million people currently buy individual health insurance plans through HealthCare.gov and state insurance marketplaces. The vast majority of those customers receive taxpayer subsidies under the Obama-era health law and would be shielded from premium increases next year.
The brunt of higher prices would fall on solid middle-class consumers who are not eligible for the income-based subsidies. Many of those are self-employed people and small business owners, generally seen as a Republican constituency.
The latest “Obamacare’’ flare-up does not affect most people that recieve coverage through their employers.