The Centers for Medicare and Medicaid Services said it had to put the payments on hold, after a US district court judge ruled the government arrived at the formula that guides the payouts in a flawed way.
CMS cites the late February court ruling in deciding to place a freeze on the $10.4 billion which it collected past year, and which ordinarily would be dispersed among high-risk insurers. The risk-adjustment program has been a source of frustration for small insurers and ACA co-ops that claim the formula makes their membership bases look healthier than they are.
President Barack Obama's signature law, the Affordable Care Act was signed into law in March 2010.
While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said. At stake are billions of dollars in payments to insurers with sicker customers.
Trump's team is considering the move after a federal court decision found the formula for calculating the risk adjustment payments to be flawed.
President Donald Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress a year ago failed to repeal and replace the law propelled by Democratic President Barack Obama.
"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said. The agency says the court ruling also prevents it from collecting additional risk-adjustment funds until the issue is resolved.
The U.S. Court for the District of New Mexico ruled the methodology used by the federal government to collect the payments was "arbitrary and capricious". "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".
"We were disappointed by the court's recent ruling", CMS Administrator Seema Verma said in the agency's statement. About 20 million Americans have received health insurance coverage through the program known as Obamacare.
Insurance companies responded quickly on Saturday with their disapproval.
"Republicans are doing a bang up job ensuring they are properly blamed for health care rate hikes this fall", Matt House, a spokesman for Senate Democratic Leader Chuck SchumerCharles (Chuck) Ellis SchumerAn end game on Supreme Court nominations Liberals forget Constitution as Supreme Court battle fires up Anti-Trump protesters sing national anthem outside rally MORE (N.Y.), said in a Monday tweet". These include eliminating the individual mandate penalty and broadening the availability of two alternatives to Affordable Care Act policies. "This is one of several steps the Trump administration has taken to undermine the ACA".