The so-called "risk adjustment" program takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees.
On Saturday, the administration said it would suspend a program that was set to pay out $10.4 billion to insurers for covering high-risk individuals under Obamacare a year ago, saying that a recent federal court ruling prevents the money from being disbursed.
The move is just the latest in a line of decisions by the Trump administration to undermine the ACA.
Since efforts in Congress to repeal Obama's signature health care law failed, the Trump administration to pursue administrative changes to chip away at the 2010 law.
This provision, called "guarantee issue", remains one of the most popular among consumers, according to numerous opinion polls. The administration could just as easily have listened to a judge in MA who ruled the opposite way or awaited the results of an appeal. "It enables the country to move away from a market where plans compete to avoid covering or charge more to people with preexisting health conditions, to one where competition is based on quality, affordable care for everyone".
The federal agency that oversees the "navigator" program said that up to $10 million will be available for outreach organizations in 34 states that use the federal marketplace. The Centers for Medicare and Medicaid Service said Saturday it was halting the payments due to a judge's ruling.
The administration argued in its announcement that its hands were tied by conflicting court rulings in New Mexico and MA.
Now, months later, CMS has asked the New Mexico judge to reconsider the decision, and in the meantime, it suspended the program.
The ambiguity involved in the conflicting New Mexico and MA rulings may mean the suspension of payments will indeed be temporary. Agents and brokers assisted 42 percent of FFE enrollees, costing the exchanges about $2.40 per enrollee to provide technical support and assistance.
Nonetheless, the timing is problematic. He warned of "turmoil" as insurers finalize their rates for 2019.
So the suspension of risk adjustment payments could throw the rate-filing process into chaos, said Cynthia Fox, director of health reform and private insurance at Kaiser Family Foundation. Rate filings by CT health insurers for 2019 are due next week.
"Costs for taxpayers will rise as the federal government spends more on premium subsidies", the group said.
"We were disappointed by the court's recent ruling", CMS Administrator Seema Verma said in a statement.
"I fear this latest decision, if it stands, will lead to fewer choices for consumers and higher premiums they would pay for health plans in 2019". Tuesday's announcement and details in an accompanying grant notice were the first information the CMS has provided this year.
Not only is the administration gutting the program, it's making them help people enroll in the plans Trump has concocted that don't comply with the consumer protection standards and other requirements of the law.
The reduction - the second round of cuts that began last summer - will shrink the federal money devoted to the groups, known as navigators, from $36.8 million to $10 million for the enrollment period that starts in November.