Trump administration freezes "risk adjustment" payments to health insurers

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On Saturday the administration announced it was suspending a risk adjustment program. "We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments", America's Health Insurance Plans said in a statement. That's why Obamacare included several provisions to help insurers cover the costs of the sickest patients - among them, the risk adjustment program. Fred Ammons, who supervises the Insure Georgia navigator organization, told the New York Times that the move will "virtually eliminate" in-person assistance for complicated Obamacare sign ups.

On Tuesday, the Centers for Medicare and Medicaid Services (CMS) announced it will reduce funding to so-called navigators, which are trained individuals or organizations that help consumers understand their options on the marketplace, to $10 billion from $36 billion in 2017. Back in February, a federal judge partially agreed with the insurer and barred the government from making further collections or payments using its current formula. Insurers proposed rates in May. It's also taken other actions recently that will increase costs. Many have started making a profit and some are expanding their involvement for 2019, a marked change from this time previous year, when several carriers said they were going to pull out of the exchanges for 2018.

Two Rochester-area insurance providers, Excellus BlueCross BlueShield and MVP Health Care, said it's too early to know how the suspension of the federal program will affect their customers. And the number of insurers planning to offer policies through the Obamacare exchanges has increased. "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.

As insurers gauge how the freezing of $10.4 billion in risk-adjustment payments could impact their financial performance, it's clear that their exposure varies significantly across the industry. That's because many ACA customers will qualify for federal government premium subsidies, which are still alive and well in Obamacare. "This decision reflects CMS' commitment to put federal dollars for the Federally-facilitated Exchanges to their most cost effective use in order to better support consumers through the enrollment process".

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For the past five years, when insurance has been available through ACA marketplaces for people who do not have access to affordable health benefits through a job, federal health officials have started every spring working with navigator groups on plans for the coming enrollment season.

"Given the continued attacks on health care, including federal rules allowing the resurgence of low-priced, junk health insurance plans, such as "association health plans" and "short-term plans", consumers looking for good, comprehensive coverage could be easily confused", said Frederick Isasi, executive director of Families USA, a left-leaning advocacy organization.

The Associated Press contributed to this article.

This follows a reduction announced by the CMS last August from $62.5 million, along with an even bigger cut to advertising for enrollment, and represents the latest in a series of moves to weaken the ACA by the administration of President Donald Trump.