The Trump administration announced Saturday that it will temporarily halt billions of dollars in payments under the Affordable Care Act's risk adjustment program, a move that could shake up insurance markets.
U.S. President Donald Trump departs after speaking at a Make America Great Again rally in Great Falls, Montana, U.S., July 5, 2018.
Under the latest cuts, so-called navigators who sign up Americans for the ACA, also known as Obamacare, will get $10 million for the year starting in November, down from $36.8 million in the previous year, according to a statement by the Centers for Medicare and Medicaid Services (CMS).
The Republican-led Congress failed previous year to repeal and replace the ACA.
In its announcement, CMS said the private sector is more cost-effective, so people looking for health coverage should be encouraged to go to insurance agents and brokers (who may receive a commission, unlike navigators).
Under the risk adjustment program, insurers with healthier patients pay those with sicker patients. CMS says the New Mexico court's ruling bars "CMS from collecting or making payments under the current methodology, which uses the statewide average premium".
"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 the agency's statement.
A federal court in MA upheld the same allocation formula in January.
Insurance is normally based on risk, with premiums costing more for clients who are expected to require more healthcare services.
Officials with CareFirst BlueCross BlueShield, one of two Maryland insurers that sell Affordable Care Act plans, said they need the payments to keep that part of their business afloat. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance".
The move should not have been unexpected given the administration's disdain for other provisions of the Affordable Care Act (ACA), leading to the elimination of other key taxpayer-funded subsidies and the outright eradication of the individual mandate through this past winter's tax cut legislation. Earlier this year, the Trump administration proposed to expand short-term junk plans, which are not required to cover people with pre-existing conditions. Having a risk adjustment program factors into these calculations. Insurers were entering or returning to at least a dozen states for 2019 enrollment, while others were expanding their presence in the states in which they operate.
New Mexico Health Connections and Minuteman Health of MA, two small nonprofit insurers, filed lawsuits in 2016, contending that the Obama administration created an inaccurate formula that unfairly rewarded large insurers.