Sure enough, the Republicans’ latest sabotage effort came Saturday. That’s when the Trump administration abruptly announced it was halting yet another program, called “risk adjustment,” designed to stabilize the individual and small-group insurance markets.
This program sounds dry and technical, but it is crucial for making sure people with preexisting conditions maintain access to care. Basically, it’s a tool for evening out costs among insurers.
If one insurer lucks out and enrolls mostly healthy, cheap people, and another accidentally gets stuck with especially sick, expensive ones, the government redistributes some money from the lucky plan to the unlucky one. Unlike in some other insurance-market stabilization programs, no taxpayer money is injected into the system; this is just about reallocating funds among insurers.
The point of this is to encourage insurance companies to compete based on the quality and value of their plans, rather than on who can cherry-pick the cheapest customers (or who can most cleverly drive away the sickest ones).
Risk-adjustment payments are not some newfangled Obamacare invention, by the way. They’re a standard health-policy tool, also used in administering Medicare Advantage and Medicare Part D plans — basically any government health-care program with multiple private insurers where you want to avoid incentives for cherry-picking.
In the case of Obamacare plans, the government has a formula for determining which insurers got stuck with sicker enrollees and which ones landed healthier ones, and, therefore, which direction the money should flow.
Two insurers, in separate lawsuits, have challenged this formula, however, because they thought they were getting shafted.
One federal district court, in Massachusetts, said the formula was fine as is. A month later, a federal district court in New Mexico disagreed. The judge there said that part of the formula was flawed, or at least required further explanation for why the government made some of the choices it did.
Initially, in March, Trump administration lawyers pushed back against the New Mexico decision and asked the judge to reconsider. They warned in a filing that vacating the existing regulation would be “tremendously disruptive, not only for insurance companies nationwide, but also for policyholders and state insurance markets generally.”
But before the judge had time to rule on this request, the Centers for Medicare and Medicaid Services suddenly announced this weekend that it would halt the entire program — nationwide and indefinitely. Now, insurers around the country are freaking out. Billions of dollars in payments that many companies were expecting remain in limbo.
In a news release, the Trump administration insisted it had no other choice. In fact, it had lots of other choices, as University of Michigan Law School professor Nicholas Bagley pointed out.
It could have, for instance, halted payments in New Mexico only, rather than nationwide, at least until the judge ruled again (something that is expected soon).
Or, better yet, the administration could have just issued a new “interim” rule with language that addressed the judge’s request for more detailed explanation. Coincidentally, administration officials already have such language handy; they recently wrote it up for another regulation!
So they could have literally copied and pasted from that.
It is unclear why the administration didn’t choose one of its less disruptive options, especially since previous court filings suggested it wanted to keep the program running. As of Monday evening, administration officials had not responded to my questions about their reasoning or timing.
It’s hard not to wonder, though, whether someone in the White House belatedly realized this case was another untapped opportunity to spook insurers into spiking premiums, finding creative ways to repel sick people or leaving the market altogether.
That would fit neatly into the administration’s broader pattern of using court cases as excuses to undermine the Affordable Care Act, after all. The others include killing reimbursements to insurers for subsidies for lower-income people and refusing to defend the law’s protections for those with preexisting conditions.
As with many other sabotaged Obamacare provisions, the law on the books still requires the Trump administration to keep its “risk-adjustment” program up and running.
But with Republicans in unified control of government, who’s going to stop this administration from breaking the law?