Trump Freezes Billions In Obamacare Payments, Outraging Insurers

The Trump administration halted billions of dollars in payments to health insurers after the Centers for Medicare and Medicaid Services, the agency that administers programs under Obamacare, announced on Saturday it was freezing payments to insurers that cover sicker patients, saying a federal court ruling ties its hands. The move brought a sharp response from health insurers warning of market disruptions and even higher costs.

The payments are intended to help stabilize health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017. The government collects the money from health insurers with relatively healthy enrollees, who cost less to insure.

In a Saturday announcement, the CMS said the move was necessary because of a February ruling by a federal court in New Mexico, which found that the federal government was using an inaccurate formula for allocating the payments; it added that the trial court in New Mexico "prevents CMS from making further collections or payments under the risk adjustment program, including amounts for the 2017 benefit year, until the litigation is resolved."

The CMS, which is part of the Department of Health and Human Services, added that the court’s ruling bars the agency from collecting or making payments under the current methodology, which uses a statewide average premium, Bloomberg reported.

We were disappointed by the court’s recent ruling. 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.

CMS Administrator Seema Verma

“CMS has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows CMS to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets,” Verma said.

The risk adjustment program of the Affordable Care Act redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees, helping to ensure that sicker individuals can receive coverage by sharing the cost of covering them. The immediate impact of the decision will be to boost healthcare costs for millions of Americans even higher, unleashing even higher inflation for staples, at a time when the Fed is keeping a close eye on rising costs.

Predictably, advocates of the risk adjustment program, and Obamacare in general, were outraged.

Risk adjustment “has been long supported and embraced by both Republicans and Democrats,” said Scott Serota, president of the Blue Cross Blue Shield Association.

“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. “It will undermine Americans’ access to affordable coverage, particularly those who need medical care the most.”

The trade group America’s Health Insurance Plans said in an emailed statement that “We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments.” It added that the move comes at a critical time when insurance providers are developing premiums for 2019 and states are reviewing rates.

“This decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own. It will create more market uncertainty and increase premiums for many health plans -- putting a heavier burden on small businesses and consumers, and reducing coverage options,” AHIP said.

AHIP urged “a quick resolution is needed to avoid greater harm to the individual and small group markets,” while Serota said CMS “has the legal justification needed to move forward with the payments regardless of the New Mexico ruling, and  should do so.”

In addition to raising costs, the announcement may also adversely impact the stock prices of select insurers: according to Bloomberg, the CMS decision will affect publicly traded insurers that have stuck with Obamacare, such as St. Louis-based Centene Corp.

CMS provided a timeline, noting that after the Feb. 28 decision by the New Mexico federal court, it filed a motion for  reconsideration, and on June 21 the court held a hearing on it. CMS is waiting for the court’s ruling.

Timeline of Key Events

March 23, 2010 - The Patient Protection and Affordable Care Act (PPACA) is signed into law by President Obama.

March 11, 2013 - CMS finalizes a risk adjustment methodology for States where HHS operates the program that includes the use of the statewide average premium in order to maintain a budget neutral program.

July 29, 2016 - New Mexico Health Connections files a complaint in U.S. District Court in New Mexico arguing, among other points, that CMS’s use of the statewide average premium was arbitrary and capricious. Minuteman Health, Inc. files a similar complaint in U.S. District Court in Massachusetts the same day.

January 30, 2018 – The US District Court for the District of Massachusetts rules for CMS, finding that CMS acted within its authority in promulgating the HHS-operated risk adjustment methodology based on the statewide average premium.

February 28, 2018 - The US District Court for the District of New Mexico issues a decision invalidating CMS’s use of the statewide average premium in the risk adjustment transfer formula for the 2014-2018 benefit years, pending further explanation of CMS’s reasons for operating the risk adjustment program in a budget neutral manner in those years.  Following this decision, CMS files a motion for reconsideration.

June 21, 2018 - A hearing is held on CMS’s motion for reconsideration.  

The CMS statement said the agency will “provide additional guidance shortly on how it will handle other issues relating to
risk adjustment payments."

Trump’s administration has used its regulatory powers to undermine Obamacare after Congress last year failed to repeal and replace the law. About 20 million Americans have received health insurance coverage through the program.

Comments

toady Tarheel Sun, 07/08/2018 - 10:35 Permalink

Exactly. The headline is just another attempt to divide the Trump camps (pro & con) yet again.

"As a result of this litigation, billions of dollars in ("risk adjustment payments") and collections are now on hold."

Again, the government DOES NOT need to be in the "risk adjustment" business.

 

In reply to by Tarheel

dirty fingernails toady Sun, 07/08/2018 - 10:49 Permalink

 

What utter blasphemy that insurance companies take a *temporary* hit while this is worked out in court! The poor executives will only be able to afford 2 mistresses and 1 new mercedes! The horror! /s

Yep, this is a BS headline. I'd be for Trump doing it, though.

Fuck the insurance companies with a splintery board.

In reply to by toady

NukeChinaNow powow Sun, 07/08/2018 - 15:05 Permalink

I didn't open the link.

With the urgency proffered I simply expected to see millions of pics of the results of the destruction of the residence of an American's soul-an infant/baby... who never got to have a 'choice' of whether it should have a right to breathe.

Infanticide at American baby-slaughter brothels. YAY WOMEN'S 'RIGHTS'!

Was I wrong?

 

In reply to by powow

glenlloyd Ex-Oligarch Sun, 07/08/2018 - 17:52 Permalink

haha - so true!

I would think it would be good to know what the insurer payments are for?

The ACA is failing and good riddance to it, it was unconstitutional to begin with. When you have a system that's failing you push it to failure as quickly as possible so the replacement will come sooner, not later.

It's failing to follow this with the financial system that will doom us to even greater problems in the future since the Fed refused to allow institutions to fail like they should have. At some point all these institutions need to failure because if you don't you won't have the necessary renewal, you won't have the competition that the system needs to reward those who perform better.

ACA should be terminated completely now. In fact it never should have been to begin with.

In reply to by Ex-Oligarch

NidStyles glenlloyd Sun, 07/08/2018 - 18:38 Permalink

Seriously man, it’s not that hard. Call the lady up, and refund the money so I am not sitting here hungry as fuck for no god damn reason other than your business is being ran poorly.

The alternative is that I call the bank and have them force you to return it. One is polite and respectful. The other is going to mar your BBB ratings. 

I am being polite about this. I know these messages get to you, because you respond to even the crap on pol

In reply to by glenlloyd

Keyser bitzager Sun, 07/08/2018 - 20:24 Permalink

Day by day, ZH is morphing into HuffPo... WTF is this headline, TRUMP blocks Obamacare payments to insurers... If you read the first paragraph, it's not TRUMP blocking payments, it's a federal judge that is blocking the payments due to inaccurate algos on the computation of the distributions... Between the trolls and the change in management, ZH ain't what it used to be... 

In reply to by bitzager

Free This NukeChinaNow Mon, 07/09/2018 - 12:34 Permalink

Exactly, who died and made women God? 60 million defenseless babies murdered in the womb since R v W, and counting, that is what I call GENOCIDE! Margaret Sanger a democrat, was an evil bitch.

These liberals, IMO, have gone full retard communist now. Universal health, redistribution of wealth and the like. Fuck 'em.

If they wanna talk tough and bring their pussy hat rebellion, let them, but I feel they don't have the bottle.

400 million guns in America (appx), with 80% or so in the hands of conservatives/libertarians, a lot with military experience vs screeching libtarts who can't figure out which bathroom to use. I have to laugh really.

Two riders were approaching fastly now...you know it's getting late!

Sic Semper Tyrannis

In reply to by NukeChinaNow

bunnyswanson GoldmanSax Sun, 07/08/2018 - 17:05 Permalink

Don't worry your pretty little head.  It was not long ago when women were institutionalized if pregnant and unmarried, those rape victims or adulteresses who found themselves with child were whisked away as was their baby minutes after birth, probably to a dismal dark orphanage where they'd face a form of torture called "satisfying the priest's dirty desires."  Things changed when it became someone's sister, daughter, aunt, wife/gf. 

Abortion is now a cull of white and black populations.

The eagerness to abort another person's child should be looked at suspiciously. 

In reply to by GoldmanSax

bunnyswanson NukeChinaNow Sun, 07/08/2018 - 16:56 Permalink

I am curious to know if there are staunch Trump supporters meeting obstacles and roadblocks in the community such that has not been experienced prior to election?

  Please upvote if you find yourself in a maze while conducting a simple business transaction or visit to a physician, church, mechanic, neighbor.

I suspect there is a list of Trump donors and it is updated and distributed daily, probably with a map, employer, family names, friends, bank account, secrets found in medical records.  This would come as no surprise. 

In reply to by NukeChinaNow

Ex-Oligarch dirty fingernails Sun, 07/08/2018 - 16:55 Permalink

Help me out here.

The court enjoined the feds from making payments to high risk pools

BUT

the court also enjoined the feds from taking payments from low risk pools.

So, this should be a net change of zero:  high risk pool premiums should go up, and low risk pool premiums should go down. 

It seems to me that the insurers and the Obamacare holdouts are just trying to shift the blame for rate increases to someone else.

In reply to by dirty fingernails

CashMcCall dirty fingernails Sun, 07/08/2018 - 17:42 Permalink

Generally, I enjoy your posts but not this one. You don't want to advocate breaching Federal Contracts that is a violation of the 10Th Amendment. This is a minor issue over methodology that was brought as an injunction to clarify various payments by a concerned party. Nobody loves Obamacare, it is a travesty, but don't confuse the requirement that Federal Contracts must not be subject to political blackmail. That is an unavailing argument. 

In reply to by dirty fingernails

artichoke CashMcCall Sun, 07/08/2018 - 23:44 Permalink

It's not political blackmail, even if Trump or Trump supporters might find the ruling's effect to their liking.  The court said he can't shift the payments.  So he doesn't shift the payments.  There's no 10th amendment violation, and besides, getting in trouble for plain-text constitutional violations is rare.  There normally has to be a legal history of what it means and/or legislation that actualizes the constitutional provision.

In reply to by CashMcCall

gdpetti toady Sun, 07/08/2018 - 10:52 Permalink

Yes... 'divide and conquer', same as usual, especially now as the SG seek to 'out their OWO, and setup their NWO'... which is why the establishment is going after itself.... dog chasingits own tail... snake etc... same analogies throughout many civilizations... this is all so classic... and when you realize that, gain a little understanding of history.... it all seems to be happening in slow motion. Trumpy was setup for this part, groomed for a long time as one potential, same as Reagan, Ike, Clinton, even Carter... the Bush clan was born inside after Prescott's activity... remember he was convicted of aiding the Nazis, but no mention in the press as he and his friends put Ike in office!

Trump, aware of it or not, is part of this 'reset'.... 'out with the OWO , in with the NWO'... fair trade? our empire is based in others exports to us, accumulating reserves and supporting our dollar as the global standard... to go 'fair', means to reset the game... to out the OWO.... which is what China, Russia and most others want anyway... reset the IMF 'fiat basket'.... none of them really want to end it... they want our hands off the helm of the ship... does Trump and  his swampy friends realize this?

In reply to by toady

GoldmanSax gdpetti Sun, 07/08/2018 - 11:19 Permalink

Soros carries his neighbors shit for his Nazi buddies but the bushes get a free pass? They are all pieces of shit and an awareness program is the cure. We can't allow our institutions to be hijacked by criminals. The law is what the average person under thinks it is, not what some well kept shill in an ivory tower says it is. We know they are doing wrong. Punish only the guilty. No quarter.

In reply to by gdpetti

are we there yet GoldmanSax Sun, 07/08/2018 - 12:10 Permalink

The reason Insurance companies are so profitable is because they are good at calculating risk and having someone else or the taxpayer pay for it. The reason medical care is so expensive is because expensively trained high IQ doctors and well equipped hospitals have to cover indigents and illegal migrants and other low worth people who can not pay their bills, So their bills are passed on to all of us in one way or another.

In reply to by GoldmanSax

mkkby JimmyJones Sun, 07/08/2018 - 17:40 Permalink

High cost is due to NO PRICE DISCOVERY.  You go to a service provider and agree up front to pay anything they decide.  As you leave you get the bill, which of course is a rape job. 

Imagine going to a grocery store with no price tags and you pay what ever they want.  No way to see if the store across the street is cheaper.  Soon a single egg would be 20k.

The answer we must all protest for is cost estimates up front and prices posted on the internet.  Competition would bring costs down 85%, which is what medicaide pays now.

In reply to by JimmyJones

jin187 are we there yet Sun, 07/08/2018 - 15:48 Permalink

While that is part of it, most of the increases are because of government interference in the market.  Insurers raise rates due to higher medical costs, and hospitals raise costs based on what they can force insurers to pay.  It's all just a big socialist circle jerk.  If health insurance were banned tomorrow, and malpractice damages were limited, the cash cost of most health services would drop by 80%.  Hell, last time I got seriously hurt, My bill was over 20k.  I offered the hospital a check for 5k to just make it go away, and they couldn't cash it fast enough.

In reply to by are we there yet

mkkby jin187 Sun, 07/08/2018 - 17:43 Permalink

The problem is NO price discovery.  All the bullshit about malpractice or insurance companies is divide and conquer. 

We need competition in health care just like in every other business.  But they'll do anything they can to prevent publishing their prices or giving out cost estimates.

In reply to by jin187

GoldmanSax are we there yet Sun, 07/08/2018 - 16:28 Permalink

Those reason are true but not the whole story. The prices are nosebleed high because their racket is protected by the government. We are forced to buy their private product. The doctors are protected from 3rd world competition. That is not free trade. I want a 3rd world doctor. I want to pay for their services with a bowl of rice and some rat meat. Fuck them and the people who want to steal from me. 

In reply to by are we there yet