Administration Suspends Billions in Payoffs to Obamacare Insurers | Trending

Administration Suspends Billions in Payoffs to Obamacare Insurers | Trending

Billions of dollars in payments to health insurers under the Obamacare health care law were stopped Saturday by the Trump administration.

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 previous year failed to repeal and replace the law". "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers". "It's time for the navigator program to evolve, which is why we are announcing a new direction for the program today", said CMS administrator Seema Verma.

The program takes payments from insurers with healthier customers and redistributes the money to companies with sicker enrollees. No taxpayer subsidies are involved.

Late a year ago, it said it would halt so-called cost-sharing payments, which offset some out-of-pocket healthcare costs for low-income patients. Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019.

The program is critical to markets under the Affordable Care Act because insurers with healthier consumers enrolled in plans reimburse insurers with sicker and more expensive enrollees.

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Trump administration officials said they were forced to make the cuts after a federal court in New Mexico ruled in February that the formula for calculating risk adjustment could not use a statewide average premium.

The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. "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".

Serota noted that the payments are required by law, and said he believes the administration has the legal authority to continue making them despite the court cases.

"As the Exchange has grown in visibility and become more familiar to Americans seeking health insurance, the need for federally funded Navigators has diminished", CMS said in a statement on Tuesday.

In its announcement, CMS said the private sector is more cost-effective, so people looking for health coverage should be encouraged to go to insurance agents and brokers (who may receive a commission, unlike navigators). "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". New Mexico's ruling alone isn't enough to freeze payments, unless, he says, it's a "politically motivated" move to further disrupt the ACA.

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