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Trump Administration Suspends Insurance Payments Under Affordable Care Act

Jul 8, 2018
Originally published on July 8, 2018 4:30 pm
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MICHEL MARTIN, HOST:

The Trump administration plans to suspend billions of dollars in payments that had been expected by health insurers under the Affordable Care Act or Obamacare. The administration said Saturday that this is necessary to comply with a judge's order that found the formula for distributing the payments was flawed. Now, these are so-called risk adjustment payments paid by insurers to other insurers to help fund sicker patients who cost more to insure. Health insurers say, without the money, the health insurance market will be disrupted, premiums could rise and fewer plans could be available.

We're joined now by Dr. Martin Hickey. He's founder of the cooperative health plan New Mexico Health Connections, which sued the government over the payments. We reached him in Albuquerque.

Dr. Hickey, thanks so much for speaking with us.

MARTIN HICKEY: Happy to do so.

MARTIN: Your organization sued because you view the way the money was distributed as unfair. Can you try to help us understand this?

HICKEY: Yes. Essentially, what it comes down to is that the formula that the Center for Medicare and Medicaid Services chose to implement favors large and established plans. Under the ACA, CMS was directed to administer the exchange and also to institute the co-ops to develop more competition. And, since its inception, these large, established plans have been the vast receiver of these monies, and small plans and new plans have had to pay out lots of money and, in fact, has been a major factor in forcing 19 co-ops to go out of business since they were developed by the ACA back in 2014.

So we think this is actually very good for consumers because it will allow more new entrants to come into the marketplace. And, as we know, the more competition, the lower the prices, so we view this as a very beneficial ruling for consumers throughout the United States.

MARTIN: I'm glad you raised that because I understand that your intention in bringing this suit was to see the formula adjusted in a way that you considered to be more fair. But were you concerned or are you now concerned that the administration won't restore this money at all and that no health plans will be funded under the program? Now, some advocates or activists are saying that this is a way to sabotage the Affordable Care Act. I mean, the administration and many Republicans in Congress have made no secret of their desire to scrap it and start over. So are you concerned that there might be no money being distributed at all?

HICKEY: What I would like to see is for this to play out in the courts if necessary. I would be concerned if CMS did not address and change the formula so that it was fair to all health plans that participate in the exchange.

MARTIN: That was Dr. Martin Hickey. He's founder of the cooperative health plan New Mexico Health Connections. We reached him in Albuquerque. Dr. Hickey, thanks so much for joining us.

HICKEY: Thank you.

MARTIN: Now, we wanted to get a sense of what this would mean for the health insurance marketplace more broadly, so we've called Anna Wilde Mathews, a reporter at The Wall Street Journal who broke the story. She's with us now.

Anna, thanks so much for joining us as well.

ANNA WILDE MATHEWS: Thank you.

MARTIN: So tell us a little bit more about the program - how it has worked to this point.

MATHEWS: The program involves moving money around among insurers. The idea is that insurers that enroll a lot of healthy people who are not going to be very costly pay into the program. And those that enroll a lot of people who have a lot of health conditions and maybe have higher claims costs are supposed to receive money out of the program. The point is to make sure that there's no incentive for insurers to seek out only healthy people.

MARTIN: How much do the major health plans rely on these funds?

MATHEWS: Well, it's a zero-sum game, so some pay into it and some receive money out of it. For 2016, for instance, the money involved in the program represented approximately 11 percent of the premiums in the individual market. So that's a large percentage of the market and a meaningful sum. For the 2017 plan year, which are the payments that would've been going out this fall, the total was going to be about $10.4 billion.

MARTIN: So what will the suspension of this program mean for insurers and for members and what they pay for premiums? Do we have any sense of that?

MATHEWS: The insurers that are currently in the marketplace are complaining that the announcement creates a great deal of uncertainty for them right now. It's very vague about exactly how long the suspension could be or what could trigger the end to it. It's vague about how it will play out in the future. So that creates a lot of uncertainty at a time when insurers are currently making decisions about rates and offerings for the Affordable Care Act plans for 2019.

MARTIN: And I note in your story that the administrator of the program, Seema Verma, said in a statement that the administration is disappointed by the court's recent ruling. But it's also true that this is an administration that has not been supportive of the Affordable Care Act. Do you think that the administration is, in fact, going to try to adjust the formula and release these funds at some point?

MATHEWS: It's not clear that they have legal authority to simply end the program. The judge in the New Mexico case disagreed with a factor of the formula that was used to implement the program, but I don't believe that his ruling implied that the entire program was unacceptable or the concept behind the program was unacceptable. And the program is part of the law. It's hard to tell how this will play out. The insurers too are not clear.

MARTIN: That's Anna Wilde Mathews. She's a reporter for The Wall Street Journal.

Anna, thanks so much for speaking with us.

MATHEWS: Thank you. Transcript provided by NPR, Copyright NPR.