Trump Administration Freezes Payments Required By The Affordable Care Act Citing a February ruling from a district court in New Mexico, the administration said it will halt risk adjustment payments required by the ACA. Insurers say the move will increase premiums.
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Trump Administration Freezes Payments Required By The Affordable Care Act

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Trump Administration Freezes Payments Required By The Affordable Care Act

Trump Administration Freezes Payments Required By The Affordable Care Act

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DAVID GREENE, HOST:

Over the weekend, the Trump administration announced that it is freezing billions of dollars in payments to insurance companies under the Affordable Care Act. The so-called risk adjustment payments are designed to help stabilize insurance markets. As NPR's Maggie Penman reports, the administration is citing a ruling earlier this year from a district court judge in New Mexico as the reason for this sudden change.

MAGGIE PENMAN, BYLINE: On Saturday afternoon, the Trump administration announced that it will withhold more than $10 billion in risk adjustment payments to insurers. Basically, risk adjustment payments take money from insurers that cover healthier, cheaper patients and give it to insurers that cover sicker and therefore costlier patients, removing the financial incentive for plans to cherry-pick only healthy people to cover. Suddenly halting these payments creates enormous uncertainty in the market at a time when insurers are trying to make decisions for next year.

LARRY LEVITT: And insurers hate uncertainty and, when faced with it, tend to raise premiums to hedge their bets.

PENMAN: Larry Levitt is senior vice president at the Kaiser Family Foundation. He says some insurers might choose not to participate in the exchanges next year at all.

LEVITT: When the rules of the game change after the fact, insurers don't necessarily see the federal government as a particularly reliable partner.

PENMAN: America's Health Insurance Plans, the trade association for insurers, put out a statement essentially saying just that - that this move will increase premiums for consumers and small businesses and reduce coverage options. The Trump administration said it had to stop the payments because of a ruling in a federal district court in New Mexico this past February. The ruling found fault with the formula used to calculate the payments. But another district court in Massachusetts upheld the formula.

LEVITT: Normally, you would expect an administration to look for ways to minimize the uncertainty and minimize the effect as these legal cases play out. So it seems like an extreme step to halt this program nationally based on a decision by one district court judge.

RODNEY WHITLOCK: What you have to keep in mind is ultimately the intent of the administration.

PENMAN: Rodney Whitlock is a lobbyist and former Republican aide. He says it's not surprising that the administration would take this opportunity to dismantle an important part of the ACA.

WHITLOCK: The executive order the president signed not long after he got to the White House after the parade - it was effectively, we're declaring war on the Affordable Care Act.

PENMAN: Whitlock says the administration is simply making good on that promise and finding legal justifications for how to do it. Maggie Penman, NPR News, Washington.

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