Affordable Care Act insurers are facing a fresh round of uncertainty that could drive up premiums or push companies to stop offering coverage through the law, after the Trump administration's latest move to cut off subsidies meant to help stabilize insurance markets.
On Saturday, the administration said it would suspend a program that was set to pay out $10.4 billion to insurers for covering high-risk individuals under Obamacare a year ago, saying that a recent federal court ruling prevents the money from being disbursed.
Jeffrey Loo, an analyst at CFRA Research, said health insurers are preparing 2019 rates "and this suspension adds financial uncertainty".
Molina and Centene could each avoid $1 billion in payments into the pool for 2017, according to Jefferies. Insurers warned that the move will have a detrimental effect on the marketplaces just as the companies are setting premiums for next year.
When the Republican-controlled Congress' effort to repeal the ACA died previous year, it appeared the law had survived.
But Senator Ron Wyden, the ranking Democrat on the Senate Finance Committee, said encouraging navigators to promote plans that don't comply with the ACA is "federally funded fraud: paying groups to sell unsuspecting Americans on junk plans that allow insurance companies to deny care on a whim and charge whatever they want is nothing but a scam".
The Centers for Medicare and Medicaid Services said it will prove more information soon on how insurers should handle other issues tied to risk-adjustment payments. On Saturday the administration announced it was suspending a risk adjustment program.
Some co-ops have sued on grounds that the funding formula is unfair to small insurers.
The administration, however, was not compelled to halt the payments on the basis of this ruling. The judge tossed out the formula used to calculate payments, finding that it was flawed.
State officials, with bipartisan support from both Gov. Larry Hogan and the General Assembly, asked the federal agency this spring for permission to establish a reinsurance program that would create a $462 million fund for insurers to cover the most expensive claims. "Obamacare is on its last legs". But people who earn too much to qualify could be priced out of insurance. That's because on Tuesday, CMS announced another major cutback to its health insurance counseling program. Removal of the tax penalty rendered the individual mandate unenforceable.
Analysts were less certain than the industry about the impact of the payment interruption on insurers.
Serota noted that the payments are required by law and said he believes the administration has the legal authority to continue making them despite the court cases. Instead, it moves funds around among insurers to make sure that even people with pre-existing conditions or who are at higher risk of getting sick can get coverage. Pregnancy could be one of these.
By the way, this rule was propagated by the Obama Administration, not President Trump. This year they helped sign up almost 520,000 people for health insurance sold through the ACA exchange in North Carolina. The reality is sick people do rack up more health care costs. The administration is also pushing to broaden the definition of short-term insurance, which is also exempted from the ACA's rules. There could have been a "substantive and thoughtful conversation" about what more needs to be done, she said. Almost 9 in 10 people buying coverage on the ACA exchanges qualify for federal subsidies based on their incomes, and the amount those subsidies rose a year ago because of an increase in silver-plan premiums.