Trump Administration Freezes Risk Adjustment Payments
July 09, 2018
On Saturday, the Trump Administration announced a temporary halt of risk adjustment payments to insurers. Those payments, totaling more than $10 billion based on 2017 business, are designed to offset higher costs for insurers that offer plans to high-risk individuals.
The risk adjustment program was a key part of the Affordable Care Act (ACA) aimed at stabilizing the market and keeping insurance premiums in check. Insurers that enrolled relatively healthy individuals would pay into the risk pool with that money being transferred to insurers that had enrolled sicker individuals.
The formula to calculate the risk adjustment payments has been criticized by some. A recent U.S. District Court ruling in New Mexico found the formula to be “arbitrary and capricious.” Citing this action, the Trump administration temporarily stopped the payments.
Several insurers are expressing concern about this action and the negative impact it may have on market stability and insurance premiums for 2019. Without knowing if or when risk adjustment payments may resume, premium increases may be needed to offset the reduced reimbursements. As premiums go up, small business owners and individuals may have fewer health plan choices or simply elect to forgo coverage.
However, HAP spoke with Pennsylvania Insurance Commissioner Jessica Altman, who said, “The Trump Administration’s decision to suspend risk adjustment payments to insurers in the individual and small group markets under the Affordable Care Act in light of the New Mexico court proceeding is concerning, but we do not anticipate that it will have an impact on our current rate filing process.”
Insurers in Pennsylvania are on track to submit final 2019 rate filings by the end of this week, and the Pennsylvania Insurance Department is planning to make those rates public on or around July 23, 2018.
The ACA has been instrumental in supporting more than 1.1 million Pennsylvanians through health insurance coverage, providing better access to health care services and dramatically reducing the uninsured population in Pennsylvania. HAP continues to promote the importance of coverage with consumers, and advocate for policies that support the goal of access to high-quality care.
If you have any questions relating to this issue, and the impact of coverage, please contact Jolene Calla, Esq. HAP’s vice president, health care finance and insurance. Questions regarding HAP’s federal advocacy efforts should be directed to Laura Stevens Kent, HAP’s vice president, federal advocacy.