Trump administration halts billions in insurance payments under Obamacare

The Centers for Medicare and Medicaid Services, which administers programs under the Affordable Care Act said the move was necessary because of a court ruling, which found that the federal government was using an inaccurate formula for allocating the payments.

world Updated: Jul 09, 2018 07:34 IST
HT Correspondent
HT Correspondent
Trump administration,Obamacare,Donald Trump
A sign on an insurance store advertises Obamacare in San Ysidro, San Diego, California.(Reuters)

The Trump administration has suspended billions of dollars in payments to health insurers under a key part of an Obama-era healthcare programme, saying that a recent federal court ruling prevents the money from being disbursed.

The Centers for Medicare and Medicaid Services (CMS), the agency which administers Obamacare, linked the suspension of funds to a ruling by a court in the US state of New Mexico that tossed out the underlying formula for collecting and making payments under the so called “risk-adjustment” programme.

“We were disappointed by the court’s recent ruling,” CMS administrator Seema Verma said in a statement. “As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”

The agency has appealed the ruling, citing a contradictory order from a court in Massachusetts state that had upheld the formula. But till the legal issues are resolved, payments worth $10.4 billion on expenses incurred by insurers in 2017 will remain suspended.

The risk-adjustment programme works on the premise of insurers with healthier and therefore less costly customers contribute into a pool that pays insurers with unhealthier and thus costlier customers. The aim was to encourage all insurers to participate in the marketplace and sell health insurance cover to all, not just to those younger and healthier.

Republicans have been trying to undo Obamacare from 2010, when it was signed into law. The Trump administration has tried and failed, despite the Republican party being in charge of the White House, the Senate and the House of Representatives.

Failing to pass a legislation to repeal and replace the law, the administration is using executive orders to chip away at it, claim Trump’s critics.

First Published: Jul 08, 2018 11:55 IST