Obamacare premiums for 2019 would go up 5 percent to 10 percent on top of rate increases that were previously expected because of uncertainty raised by the Trump administration’s suspension of payments among insurers to cover sick enrollees.
That is what Tennessee Insurance Commissioner Julie Mix McPeak told me in an interview about the impact of the Department of Health and Human Services’s July 7 announcement that it was suspending $10.4 billion in transfer payments among insurers due to a ruling in February by the U.S. District Court for the District of New Mexico.
McPeak, who is also president of the National Association of Insurance Commissioners, said the NAIC is conducting an analysis to determine if any insurers will have liquidity or solvency problems as a result of the suspension.
Under the Affordable Care Act, insurers must offer coverage to everyone regardless of whether they have pre-existing conditions, and they can’t charge more for coverage. The law’s risk adjustment program is intended to spread the financial risk borne by insurers to cover high-risk individuals and protect them from adverse selection. Adverse selection occurs when an insurer covers a sicker population, raising claims and premiums and causing the insurer to be less competitive.
But many small, new ACA entrants have had the biggest problems with the way the risk adjustment program has been implemented.
Kaiser Permanente owes the most money for 2017 under the program—$928 million—while Blue Shield of California stands to gain the most—$696 million, according to a Centers for Medicare & Medicaid Services report.
New Mexico Health Connections (NMHC), a 19,000-member consumer operated and oriented health plan (CO-OP) created under the ACA, filed a suit in federal district court in 2016 challenging the risk adjustment regulations issued during the Obama administration.
The court sided with NMHC, saying the HHS needed to justify the way it is implementing the program. The HHS says it is working to resolve the matter in accordance with the court’s ruling.
NMHC has invested heavily in medical management to prevent hospitalizations and promote the health of its members, Mark Epstein, the chief medical officer of True Health New Mexico, told me. NMHC contracts with True Health New Mexico to provide all health plan services, including medical management, claims, and customer service.
But the formula used by the HHS to determine risk adjustment payments puts at a disadvantage plans that manage care and offer lower premiums as a result.
The health insurance industry is hoping the matter will be resolved quickly as insurers are getting premiums made final for 2019.
On July 19, the Trump administration said it is preparing a regulation that would allow the resumption of the payments.
The Office of Management and Budget was sent a rule from the Centers for Medicare and Medicaid Services tied to the risk-adjustment program.
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