Only a day after we learned that health insurers are flocking back into the Obamacare markets despite persistent efforts by the Republican administration to sabotage those markets, the administration responded with a new sabotage effort intended to damage those insurers good and hard. The Centers for Medicare and Medicaid Services (CMS) announced, on a Saturday afternoon, no less, that it is summarily halting the Affordable Care Act’s “risk adjustment” program–and won’t be paying out the over $10 billion due to insurers this fall.
The purpose of the risk adjustment program is to level the playing field between individual insurers. Those that have attracted healthier than average, and therefore more profitable, consumers are required to pay funds into the the pool, which are then distributed to insurers with a higher number of less-healthy (and therefore unprofitable) customers. This is meant to provide some relief for companies at the less profitable end of the spectrum, at the expense of insurance companies that (usually, intentionally) just happen to have scooped up the most profitable customers.
The short version, then, is that this is an expensive blow to those companies that have done the right thing, accepting all customers as was the law’s intention, and a boon to companies that have improperly discriminated against less-healthy customers.
The Saturday statement by Trump CMS Administrator Seems Verma claims that since there is “litigation” on the formula used to calculate which insurers must pay into the risk adjustment pool and which receive those funds back out, their hands are tied and the program is “now on hold.” That is disingenuous, according to experts; while a single New Mexico judge did issue a ruling disputing the formula–an outcome which is at odds with litigation elsewhere–the decision to put the entire program on hold is an implausible response.
“They’re asking the court to reconsider, which is something,” [University of Michigan law professor Nicholas Bagley] said. “But there are lots of ways to limit the scope in the meantime and they’ve chosen to do none of them. … Normally, you would work a lot harder, as the federal government, to keep your program going.”