The Centers for Medicare and Medicaid Services (CMS), the agency that oversees the program, cited a recent federal court decision that found the formula for calculating the risk adjustment payments to be flawed.
CMS said that the amount frozen for the 2017 benefit year is $10.4 billion, which is drawn from insurers to go to other insurers. "It has also led to upstarts, small plans and unprofitable ones paying billions of dollars to larger, more established and profitable insurers".
The CMS statement said the agency has asked the New Mexico court to reconsider its decision and expressed hope for a prompt resolution of the issue. "The decision will have serious consequences for millions of consumers who get their coverage through small businesses or buy coverage on their own", the group said.
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The move is expected to add to premium increases next year. "It moves us back to some extent to the status quo where people with pre-existing conditions found it very hard to get insurance". In a statement America's Health Insurance Plans, the trade association for health insurance companies, said they are "very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments". "This action will significantly increase 2019 premiums for millions of individuals and small business owners and could result in far fewer health plan choices".
The ripple comes at a pivotal time for the Affordable Care Act's marketplace.
"Risk adjustment under the ACA has been an example of a well-meaning regulation that has had destructive impacts directly contrary to its intent", Jonathan Halvorson, a health care public policy adviser at consulting firm Sachs Policy Group, stated in an article for The Health Care Blog.
The risk-adjustment program, which does not cost taxpayers any money and is required by law, is created to ensure that health care coverage is available for sicker, higher-cost patients by sharing the cost of covering them.
Dr. Dave Weldon, president of the Alliance of Health Care Sharing Ministries, discusses why health care sharing ministries could be a good alternative for people who can't find affordable health care. President Donald Trump has repeatedly talked about trying to end the ACA, known colloquially as Obamacare, since announcing his campaign. Some insurances have even expanded their presence in states where they were already operating with help from the Affordable Care Act.