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WH Suspends $10.4B in Obamacare Insurer Payments

11 July 2018

The cuts to grass-roots groups around the country was announced three days after health officials revealed that, because of a pending lawsuit, they were suspending a program created by the law to even out the burden on health insurers whose customers are especially unhealthy or sick. It's a move that could shake up insurance markets.

"An effective risk adjustment program is crucial to the sound operation of a health insurance marketplace in which individuals, families and small businesses with health needs have access to more affordable, high-quality coverage", said Bill Wehrle, Kaiser Permanente vice president of health insurance exchanges, in a statement.

Insurance is normally based on risk, with premiums costing more for clients who are expected to require more healthcare services.

The Trump administration is eliminating most of the funding for grass-roots groups that help Americans get Affordable Care Act insurance and will for the first time urge the groups to promote health plans that bypass the law's consumer protections and required benefits. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved.

The announcement was made by Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, and was precipitated by a New Mexico court ruling that suggested the calculations for the risk-adjusted premiums were flawed even despite a MA ruling that validated them. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS administrator Seema Verma reportedly said in a statement. The CMS has appealed the decision, particularly because a MA court upheld such payments.

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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.

It could also encourage more insurers to bow out of Obamacare. The Trump administration is making it easier for Americans to sign up for these policies, which many experts say will weaken Obamacare by siphoning off younger and healthier enrollees.

The Center for Medicare and Medicaid Services (CMS) has suspended payments to health insurers with a large number of sick Obamacare clients.

"We urge the Trump administration to back off of this unsafe and destabilizing plan, and instead begin working on bipartisan solutions to make coverage more affordable", said Brad Woodhouse, the executive director of Protect Our Care, a progressive group that supports Obamacare. These alternative plans don't have to provide all of the Affordable Care Act's consumer protections.

These moves are prompting some insurers to request premium hikes for 2019 in the double digits.

WH Suspends $10.4B in Obamacare Insurer Payments