Maryland's health insurance companies are concerned that a Trump administration decision to suspend payments that help to cover the costs of the sickest patients will further destabilize the market and could push them to seek even higher premiums on plans consumers already say are too expensive.
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. Payments for 2017 are $10.4 billion.
Under the risk adjustment program, insurers with healthier patients pay those with sicker patients.
President Barack Obama's signature law, the Affordable Care Act was signed into law in March 2010.
The Risk adjustment formula is a key component of Obamacare, allowing for market stabilization. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS Administrator Seema Verma said in a statement. Insurers say the sudden halting of those payments creates uncertainty at a critical time, as they are now developing their premiums for 2019.
In January this year, the federal district judge in MA upheld the methodology used by the federal government to calculate risk adjustment payments.
President Donald Trump's administration has used its regulatory powers to undermine Obamacare after the Republican-controlled Congress previous year failed to repeal and replace the law. "And costs for taxpayers will rise as the federal government spends more on premium subsidies".
"This action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices", Serota said in a statement. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved.
The main insurance trade associations in Washington have been organizing calls with their member companies and trying to coordinate a response.
The suspension of the payments comes amid other efforts by the Trump administration to try to chip away at the landmark health care law. Overall, the momentum has been positive, with numerous major insurers following the broader market's upward momentum.
Trump and his team have continued to argue that the individual mandate is unconstitutional and has promised to refuse to defend any parts of Obamacare in court. "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.