On Saturday, the Trump administration announced it would temporarily suspend a program that helps health insurers in the individual market cover the costs of high-risk enrollees, injecting uncertainty into the health insurance markets that could lead to higher premiums and fewer insurers offering coverage.
Sound familiar? It should, as it’s just the latest of many Trump administration efforts to sabotage the Affordable Care Act (ACA), including a similar effort from last October when the Trump administration abruptly cut off reimbursement payments to health insurers for subsidies they provide to consumers with low incomes. That action caused North Carolinians to pay a premium hike of 14.1 percent for Blue Cross Blue Shield of NC plans this year.
The insurance industry is already sounding the alarm about this decision. America’s Health Insurance Plans (AHIP) released a statement shortly after the announcement highlighting the sabotage effect:
We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments. This decision 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. And costs for taxpayers will rise as the federal government spends more on premium subsidies.
After all, suspending the Risk Adjustment program means insurers who cover sicker enrollees are missing out on billions of dollars they are owed under the law, and if the fund transfers aren’t restored, it’s likely consumers who will pay the price.
Risk adjustment programs—which enjoy bipartisan support in programs like Medicare Part D and Medicare Advantage—exist in order to maintain a functioning health insurance market in which insurers cannot discriminate against people with pre-existing conditions. The ACA’s Risk Adjustment program requires insurance companies that enroll relatively healthier populations to transfer funds to companies who enrolled older, sicker, and higher-risk enrollees, creating a disincentive for insurers to game the system (to the extent they can under the ACA) in an effort to avoid covering high risk patients.
The administration cites a months-old U.S. District Court decision for its announcement, but legal analysts have already poked holes in the government’s case. University of Michigan law professor Nicholas Bagley writes:
CMS says that the ruling “prevents [the agency] from making further collections or payments under the risk adjustment program, including amounts for the 2017 benefit year, until the litigation is resolved.” That’s wrong. The truth is that the Trump administration has lots of options. It’s just choosing not to exercise them.
Like in other issue arenas, the Trump administration has manufactured a crisis that will harm North Carolinians, and in a continued demonstration of bad faith, it’s refusing to govern effectively.