The Trump administration said Saturday it's been forced to freeze critical Obamacare payments due to a federal court decision in New Mexico, potentially causing more instability in the program's fragile markets.
The agency said it had no choice after a U.S. District Court in New Mexico said the payments are invalid, due to the formula used to make them. "As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold", CMS administrator Seema Verma reportedly said in a statement.
The funds were expected to go out this fall, the Journal reports. Payments for 2017 are $10.4 billion.
"So much uncertainty put in the market at this point of time is very unnerving", said Ritu Agarwal, senior associate dean of research at the University of Maryland Robert H. Smith School of Business, who follows the health care system.
"The federal government's decision to suspend payment transfers under the ACA's risk adjustment program could have a significant impact on premiums and place an additional burden on people in the community who can least afford it", CareFirst's president and CEO, Brian Pieninck, said in a statement.
The main insurance trade associations in Washington have been organizing calls with their member companies and trying to coordinate a response.
"We are extremely disappointed that the administration has frozen payment transfers under the Affordable Care Act's (ACA) risk adjustment program, which is created to keep costs down for consumers while meeting the medical needs of those requiring significant care", President and CEO Scott Serota said in a statement. "It will undermine Americans' access to affordable coverage, particularly those who need medical care the most".
While imperfect, the risk adjustment program "has helped promote market stability over the past five years", Wehrle said.
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.
Republicans made this argument once before, claiming that the individual mandate for consumers to buy health insurance is unconstitutional.
"Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare".
The administration has made several other moves in recent years to scale back or halt implementation of certain aspects of the ACA.
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