The federal Centers for Medicare and Medicaid Services will temporarily freeze payments for the so-called "risk-adjustment" program that takes money from insurers and redistributes it to companies with more expensive patients.
Publicly traded insurers with large presences in Obamacare include Centene Corp. and Molina Healthcare Inc.
Just last week, CMS said because of a pending lawsuit it was suspending a program created by the law to even out the burden on health insurers whose customers are especially unhealthy or sick. The most recent analysis of the issue was done in 2015 by H&R Block, which found that 52 percent of people who enrolled in health insurance through Affordable Care Act marketplaces around the country ended up paying back some of the subsidies.
The Centers for Medicare and Medicaid Services said it will prove more information soon on how insurers should handle other issues tied to risk-adjustment payments.
The Affordable Care Act (ACA), which provides access to health care for millions of Americans with pre-existing conditions, came under attack by Republicans in Congress long before it became law in 2010.
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"Risk adjustment under the ACA has been an example of a well-meaning regulation that has had destructive impacts directly contrary to its intent", Jonathan Halvorson, a health care public policy adviser at consulting firm Sachs Policy Group, stated in an article for The Health Care Blog. The agency also said that the people confused by health insurance benefits can use insurance agents and brokers for help.
"The truth is that the Trump administration has lots of options". This introduces uncertainty into the ACA markets just as insurers are deciding next year's rates.
Payments and collections of risk adjustment payments and charges were scheduled to begin in August. Despite the Trump administration's prior attempts to dismantle the law or undermine it, some insurers that have stuck with the program have turned profits, and there have been early signs that some health plans would expand their coverage footprints for next year.
Insurers rely on the funding, which serves as a backstop for those who wind up with a high share of costly enrollees. Another federal judge upheld the risk adjustment formula in a separate case filed in MA. Following the decision, CMS asked the court to reconsider its ruling.
The suspension comes as insurance companies are hammering out rates for the next enrollment period.
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"It has caused insurer collapses and market exits that reduced competition. There is a need to analyze insurers case-by-case and account for their competitive landscapes", said Tinglong Dai, an associate professor of operations management and business analytics at the Johns Hopkins University Carey Business School. That's because many ACA customers will qualify for federal government premium subsidies, which are still alive and well in Obamacare.
"This action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", said Scott Serota, CEO of the Blue Cross Blue Shield Association, which represents 36 independent insurers, many of whom are key players on the exchanges.
Navigators say they don't get credit for all the consumers they help guide through the process but don't actually sign up.
Navigators applying for funding will also be encouraged to show how they will educate people about the newly expanded alternatives to Obamacare, such as association health plans and short-term plans.
These plans, however, aren't required to have the same consumer protections as ACA policies.
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