Stop Sign

Update July 26: Just this week CMS found a work around of the court ruling, issuing  an interim rule, the “Ratification and Reissuance of the Methodology for the HHS-operated Permitted Risk Adjustment Program under the Patient Protection and Affordable Care Act”  an interim final rule, meaning it takes effect immediately.  In short, this means that CMS will reinstate the risk adjustment payments that were suspended by the agency earlier this month.

Earlier this month, the Center for Medicare and Medicaid Services (CMS) announced it is temporarily suspending risk adjustment payments, a cornerstone of the Affordable Care Act (ACA), more commonly referred to as “Obamacare.”  The payments, which total $10.4 billion, help insurers offset the cost of providing mandatory coverage to high risk consumers. Without risk adjustment payments, insurance companies that cover a larger pool of high-risk patients cannot turn a profit under the ACA mandate. In other words, the payments supplement insurance premiums for high risk patients. The funding for risk adjustment payments come from those insurance companies that cover fewer high-risk patients.

Following a lawsuit by health insurance co-op New Mexico Health, a federal judge in New Mexico ruled the payments to be “arbitrary and capricious.” CMS believes this ruling requires them to stop payments. However, a Massachusetts federal judge recently upheld the payments, providing conflicting federal court opinions on the topic. This decision to uphold comes as a complete surprise to the insurance industry, which cites the conflicting rulings as cover for the administration to continue with the payments, or at least to do so in every state except for New Mexico.

The prevailing belief is that the administration’s decision to suspend payments nationwide is political and another attempt by the White House to undermine the ACA since they have been unable to repeal the law through legislation. The administration, which denies this speculation, has stated publicly that it will repeal Obamacare and in the absence of legislative action, have taken steps to weaken the program.

Despite these efforts, enrollment remains strong, with 11.8 million enrollees in 2018, down by only 3.7% of 2017 enrollment.

Here’s a look at some of the administration’s actions to disrupt Obamacare:

January 2017, the president announces a 90% cut to the advertising budget. Again this week, the administration further cut the ACA community outreach budget, from $36 million to $10 million.

April 2017, CMS releases a final rule outlining the “Market Stabilization Plan,” which decreases enrollment opportunities, requires past due premiums to be paid before re-enrollment can occur, allows insurers to offer plans with lower premiums but higher deductibles, and ends agency review of health plan adequacy, giving oversight to the states.

October 2017, the White House announces it will not appeal a court ruling that deems Cost Sharing Reduction (CSR) payments “illegal,” ending the cost sharing subsidies that allow low-income patients to afford insurance. The law still requires carriers to provide CSR on Silver Plans to those under 250% of FPL.

December 2017, the president signs a tax reform bill that ends the ACA penalty for non-coverage. Beginning with 2019 tax returns, non-covered taxpayers will not have to pay the ACA penalty.

April 2018, CMS releases the final 2019 ACA marketplace rule. Among the changes, states are given the ability to define Essential Health Benefit coverage; the premium rate increase threshold requiring federal review increases from 10% to 15%; and ACA penalty exemptions are granted to qualifying individuals for 2018 and retroactively back to 2016.

June 2018, the Department of Labor releases a final rule that expands Association Health Plans, allowing small businesses and self-employed individuals to purchase plans that are cheaper and provide less coverage than the ACA plans. To learn more, read our article Department of Labor Finalizes Rule on Association Health Plans.

With health insurers nationwide currently submitting new rates and plans to their state regulators, and 2019 enrollment opening on November 1st, we will soon gain a better understanding of how the 2018 actions will help the president to achieve his campaign promise to dismantle Obamacare. And, of course, if he succeeds, whether Congress will replace the health care program or if the private markets will step in to provide coverage to high-risk and low-income consumers: two populations which, until the ACA, didn’t have access to insurance or were priced out of coverage.