In an unusual Saturday announcement, the Centers for Medicare and Medicaid Services (CMMS) said it will no longer collect and pay out money under the “risk adjustment” program of the Affordable Care Act (ACA) also known as Obamacare.
By freezing risk adjustment payments the move will add significantly to health insurance premium increases next year.
Under Obamacare the program of risk adjustment was designed to protect health insurers from financial losses caused by very sick patients who run up large medical bills.
Billions of dollars in payments to health insurers with sicker customers will be lost due to the surprise CMMS announcement.
This latest action by the Trump administration action will continue to disrupt the ACA, the controversial yet popular health care law that has come under attack as Trump and Congressional Republicans attempted to repeal it. Although GOP repeal efforts failed, Trump has taken many steps through the executive branch to weaken it which has resulted in millions of people losing health coverage while also significantly raising the medical costs of tens of millions of Americans.
In its announcement yesterday CMMS said they are taking this action because of conflicting court rulings in different lawsuits filed by some small health insurance companies who have complained that they are not being fairly treated under the program.
The risk adjustment program takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees. Payments for 2017 were $10.4 billion.
The purpose of the risk adjustment program is to remove financial incentives for health insurers to “cherry pick” healthier customers, and spread around the cost of insuring sicker customers.
The federal government uses the same approach with Medicare private insurance plans and Medicare prescription drug plans.
The CMMS announcement caused an immediate outcry from health insurance lobbying groups who said that not only would the government’s latest action create unfair financial burdens but it would also disrupt a program that they believe is working very well and achieving its intended results.
Clearly Trump and the GOP Congress don’t understand that people want health insurance and medical care to be less expensive, not more expensive. Democrats, however, hope that Trump’s continued attacks on Obamacare will be politically unpopular and carry them to victory in November’s midterm elections.