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Winners and losers of Trump’s decision to halt ObamaCare payments

11 July 2018

"CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets", CMS Administrator Seema Verma said in a July 7 statement.

Maryland's health insurance companies are concerned that a Trump administration decision to suspend payments that help to cover the costs of the sickest patients will further destabilize the market and could push them to seek even higher premiums on plans consumers already say are too expensive.

The mainstream media report offered more criticism from supporters of the Affordable Care Act.

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.

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"So much uncertainty put in the market at this point of time is very unnerving", said Ritu Agarwal, senior associate dean of research at the University of Maryland Robert H. Smith School of Business, who follows the health care system. The payments work this way: The government takes money from insurers with healthier, low-risk customers, and gives it to insurers with less-healthy, higher-risk customers. "And costs for taxpayers will rise as the federal government spends more on premium subsidies", AHIP said in a statement. Through the program, roughly 20 million Americans have received health care coverage.

The Blue Cross Blue Shield Association, a federation of 36 Blue Cross and Blue Shield companies nationwide, also expressed disapproval at the move, saying it could create "turmoil" in the market.

CMS was referring to a February ruling from a federal court in New Mexico that invalidated the risk adjustment formula, and a January ruling from a federal court in MA that upheld it.

The payments are meant to help stabilize health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

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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.

Republicans made this argument once before, claiming that the individual mandate for consumers to buy health insurance is unconstitutional.

Some health care experts, however, believe that risk adjustment has caused more damage than good and needs urgent fixing. In October 2017, the White House announced it would end Obamacare cost-sharing payments that helped lower-income enrollees pay for health care. Insurers were entering or returning to at least a dozen states for 2019 enrollment, while others were expanding their presence in the states in which they operate.

Similarly, previous year the Trump administration ended Obamacare's cost-sharing reduction payments to health insurers. These alternative plans don't have to provide all of the Affordable Care Act's consumer protections.

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Winners and losers of Trump’s decision to halt ObamaCare payments