The Trump administration's decision to freeze billions in payments to health insurers with plans under Obamacare that cover a higher number of sicker patients could cause health care premiums to rise in 2019.
CMS, which is overseen by the U.S. Department of Health and Human Services, said the move was necessary because of a February ruling by a federal court in New Mexico, which found that the federal government was using an inaccurate formula for allocating the payments.
The Trump administration has suspended more than $10 billion in Obamacare payments to insurance companies that lost money on state insurance exchanges.
Under the risk adjustment program, insurers with healthier patients pay those with sicker patients.
The federal court ruling prevents the agency, which administers the Obamacare risk-adjustment program, from making further collections or payments, including those for the 2017 benefit year, until the litigation is resolved, the agency said.
While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said.
"This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own".
However, the trade group America's Health Insurance Plans (AHIP) said in a statement that the recent move would lead to uncertainty and increase premiums, putting the burden on small businesses and consumers.
"We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act's (ACA) risk adjustment program, which is created to keep costs down for consumers while meeting the medical needs of those requiring significant care", President and CEO Scott Serota said in a statement. The Trump administration claims it is obligated to suspend these payments because of a court ruling out of New Mexico questioning their legality, but there is reason to be skeptical.
The CMS statement said the agency will "provide additional guidance shortly on how it will handle other issues relating to risk adjustment payments". It's a move that could shake up insurance markets.
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Since Congress was unable to pass such a law, Trump and his aides have been taking a series of steps to weaken the law through administration maneuvers.
But CareFirst and Kaiser could ask to adjust their rates higher given the Trump administration's decision.
The Center for Medicare and Medicaid Services (CMS) has suspended payments to health insurers with a large number of sick Obamacare clients.