Risk Adjustment Payments are Frozen Again in Yet Another Attempt to Sabotage the ACA

The Trump administration is stopping $10.4 billion in payments to insurers under the Affordable Care Act’s risk-adjustment program. This is likely to lead to an increase in premiums.[1][2][3]

The Republican party has stopped risk-adjustment payments before, for example Marco Rubio managed to do this in 2015 (the premium increases for 2016 were then significant).

This time is a little different as the root is CMS making the choice not to collect or disburse $10.4 billion owed from 2017 (which implies that insurers can kiss their $10-ish billion from 2018 goodbye too).

What this means is insurers will collectively eat $10.4 billion they though they were getting for 2017 alone, and then will be unsure about the future, and thus will price into their plans the fact that they can’t trust the government to make good on risk-adjustment payments (this is what what happened in 2015 – 2016 too essentially).

Further, the new rates of insurers will be paid for by the tax payer due to the fact that subsidies cap how much individuals can pay.

Thus, those without subsidies and the government will end up paying higher costs due to this move by CMS.

To be fair to CMS, they are currently citing some conflicting court rulings for their choice… but to be even more fair, they didn’t have to take this action or use those court rulings as an excuse. Instead, this was a conscious choice that fits the ongoing Republican strategy for taking down the ACA bit by bit.

The reality is this is just another tactic in a long line of tactics to break ObamaCare (just like the Rubio thing, just like the Medicaid expansion opt-out, just like going after out of pocket subsidies, just like getting rid of the mandate, etc).

It is no surprise that the Trump administration and Republican party are moving forward with their plan to break ObamaCare, as it has worked very well so far (consider how many Republicans won seats since the ACA passed, consider the election of Trump, consider how the ACA being bad was a voter issue that moved voters).

The higher premiums go, the more the government spends on subsidies, and the more upset people are… and consequently the easier it is to win on the message of “ObamaCare is bad” and the easier it is for Republicans to reshape the healthcare system.

The main gripe I have with that is: Breaking the ACA and shifting the cost burden to industry and consumers isn’t “repeal and replace” (and it sure isn’t “very good affordable healthcare for everybody” or whatever Trump’s talking point was). This is just same old same old, it is the Republican party undermining the ACA over and over until it breaks.

“This decision comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates,” AHIP said in a statement. “This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own. 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. And costs for taxpayers will rise as the federal government spends more on premium subsidies.”

Citations

  1. CMS suspends $10.4B in risk adjustment payments to insurers. FierceHealthCare.com.
  2. Trump administration freezes Obamacare risk-adjustment payments. Chicagobusiness.com.
  3. Marco Rubio Quietly Undermines Affordable Care Act. NyTimes.com.

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