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.
The move should not have been unexpected given the administration's disdain for other provisions of the Affordable Care Act (ACA), leading to the elimination of other key taxpayer-funded subsidies and the outright eradication of the individual mandate through this past winter's tax cut legislation.
The Trump administration is halting billions of dollars in payments required under the ACA, citing a district court decision in New Mexico from earlier this year. The idea is to insulate insurance companies from the cost of enrolling people with pre-existing conditions, and remove the incentive for insurance companies to cherry pick healthy people. "It will undermine Americans' access to affordable care, particularly for those who need medical care the most".
The New Mexico ruling found fault with the formula used by the government to calculate the payments, saying it was "arbitrary and capricious".
The announcement was made by Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, and was precipitated by a New Mexico court ruling that suggested the calculations for the risk-adjusted premiums were flawed even despite a MA ruling that validated them.
The court's ruling bars the agency from collecting or making payments under the current methodology, which uses a statewide average premium, said CMS, which is part of the Department of Health and Human Services.
In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.
"Insurers hate uncertainty, and when faced with it tend to raise premiums to hedge their bets", says Larry Levitt, Senior Vice President at the Kaiser Family Foundation. Health law experts are...
This is distinct from the debate over ObamaCare's cost-sharing payments, which the Trump Administration cut off previous year after a federal judge barred the subsidies that Congress had not appropriated.
The Trump administration has halted billions of dollars of Obamacare payments to insurers due to a court ruling.
"The Trump administration just keeps pushing their destructive repeal-and-sabotage agenda, no matter the cost to the American people", Brad Woodhouse, the director of Protect Our Care, an advocacy group that supports Obamacare, stated in the New York Times report.
Insurers criticized the payment freeze, arguing it harms consumers and will cause turmoil for the insurance industry as they move to finalize their 2019 rates.
The administration's funding for such outreach had already been slashed previous year to well below the $63 million budgeted annually under former President Obama.