"As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS Administrator Seema Verma said in a statement. It shuffles money from plans with healthier-than-average members to those with larger numbers of sicker, higher-cost members.
The administration said it was withholding $10.4 billion in the so-called "risk adjustment" payments, citing a district court ruling from earlier this year in New Mexico.
CMS plans to appeal the court's ruling, as the U.S. District Court for the District of MA ruled to uphold the payments. "The executive order the president signed, not long after he got to the White House after the [Inaugural] Parade was effectively, 'We're declaring war on the Affordable Care Act.'" Whitlock says, the goal has been to make the marketplace as inhospitable as possible for participating plans, and this is just one more step in that direction. The CMS, which noted that a federal court in MA found its formula fair, has asked the New Mexico court to reconsider its decision and said it is seeking a quick resolution to the legal issue.
While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said. "It will create more market uncertainty and increase premiums for many health plans - putting a heavier burden on small businesses and consumers, and reducing coverage options", AHIP said.
Reuters' characterization of the move is that "President Donald Trump's administration has used its regulatory powers to undermine Obamacare after the Republican-controlled Congress past year failed to repeal and replace the law".
About 20 million Americans have received health insurance coverage through the program.
Navigators applying for funding will also be encouraged to show how they will educate people about the newly expanded alternatives to Obamacare, such as association health plans and short-term plans.
Insurance Commissioner Al Redmer Jr. said that as of now he doesn't expect the latest decision to interrupt the state's rate-setting process. Health law experts are...
A professor who follows Obamacare said it is unclear if the payments' suspension will result in higher premiums. "There is a need to analyze insurers case-by-case and account for their competitive landscapes", said Tinglong Dai, an associate professor of operations management and business analytics at the Johns Hopkins University Carey Business School.
The payments can be controversial, Dai said.
New Mexico Health Connections and Minuteman Health of MA, two small nonprofit insurers, filed lawsuits in 2016, contending that the Obama administration created an inaccurate formula that unfairly rewarded large insurers. In Maryland, Kaiser usually ends up paying CareFirst.