U.S. freezes payments to ACA insurers with sicker patients

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The Trump administration said Saturday that it is temporarily halting billions of dollars of payments created to help insurers meet the Affordable Care Act requirement that they provide coverage regardless of whether a person is healthy or sick. With premium increases on the horizon, they expected what has been a volatile market to stabilize.

Insurance stocks may be a focus in Monday morning's trading.

The payments are meant to help stabilise health insurance markets by compensating insurers that had sicker, more expensive enrollees in 2017.

Trump's administration has used its regulatory powers to undermine the ACA on multiple fronts after the Republican-controlled Congress past year failed to repeal and replace the law instituted by Democratic President Barack Obama.

"We urge the Trump administration to back off of this risky and destabilizing plan, and instead begin working on bipartisan solutions to make coverage more affordable", said Brad Woodhouse, the executive director of Protect Our Care, a progressive group that supports Obamacare.

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In its announcement, CMS said the private sector is more cost-effective, so people looking for health coverage should be encouraged to go to insurance agents and brokers (who may receive a commission, unlike navigators).

The Blue Cross Blue Shield Association, whose members are a mainstay of Affordable Care Act coverage said it was "extremely disappointed" with the administration's action.

CMS plans to appeal the court's ruling, as the U.S. District Court for the District of MA ruled to uphold the payments.

Officials said Saturday that the administration is acting because of conflicting rulings in lawsuits filed by some smaller insurers who question whether they're being fairly treated.

The U.S. Court for the District of New Mexico ruled the methodology used by the federal government to collect the payments was "arbitrary and capricious".

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On Thursday the Centers for Medicare and Medicaid Services (CMS) announced the latest effort to send ACA markets into the proverbial death spiral.

The move sent shock waves through the insurance industry, which claimed that such market disruption could have near-immediate consequences for insured populations. This is the second round of cuts, after CMS reduced funding for navigators by 41 percent, from $62.5 million, last August, and also cut the budget for Obamacare outreach and advertising by 90 percent.

The news comes at a critical time for the Covered California exchange, which was set to announce rates for 2019 this month. "Cutting such payments achieves the opposite effect".

The New York Times suggested the payment freeze could "increase uncertainty in the markets and drive up premiums this fall". In Maryland, Kaiser usually ends up paying CareFirst.

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