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The Centers for Medicare and Medicaid Services (CMS), which administers ACA programs, said on Saturday that months-old conflicting court rulings related to the risk adjustment formula prevent them from making payments.
The Affordable Care Act's (ACA) "risk adjustment" program is meant to incentivize health insurers to cover individuals with pre-existing and chronic conditions by collecting money from insurers with relatively healthy enrollees to offset the costs of other insurers with sicker enrollees.
They say the moves will siphon healthier customers out of the Obamacare markets, raising premiums for everyone, and that Republicans will pay a political price for the moves in this November's mid-term elections.
CMS said in a statement that the funds were being cut because people are more familiar with the exchange program, and that the programs enrolled less than 1% of participants a year ago. Federal health officials are required each year to calculate which insurers with relatively low-priced consumers must chip in to a fund, and which ones with more expensive customers are owed money. "This decision reflects CMS' commitment to put federal dollars for the Federally-facilitated Exchanges to their most cost effective use in order to better support consumers through the enrollment process", CMS Administrator Seema Verma said in a statement Tuesday.
The cut will impact navigators, the nonprofit organizations which the federal government pays to assist with registration in the countries which use HealthCare.gov due to their online market for individuals attempting to have protection through the Affordable Care Act.
Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress previous year failed to repeal and replace the law instituted by Democratic President Barack Obama. In 2016, funding for navigator groups was $63 million, so the most recent funding cut represents an 80% reduction from two years ago.
But CareFirst and Kaiser could ask to adjust their rates higher given the Trump administration's decision.
A federal court ruling in New Mexico found the administration did not properly justify its formula for dispensing the funds.
More than 20 million people have coverage through former President Barack Obama's law.
The cost of any increase in premiums that results from the risk adjustment payments may come from taxpayer dollars. Small insurers often complain about risk adjustment payments because they end up paying their larger competitors, who tend to have the sickest patients. "This comes at a time when the market was looking really strong for 2019, and insurers were coming off a very profitable year". If that doesn't happen, some insurers may need to boost their premiums for 2019, she said.
If the individual mandate is ruled unconstitutional, private insurance companies could revert to rejecting people with many conditions-including heart disease, cancer, diabetes and a host of less serious health problems-or charging them exorbitant rates for coverage.
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