Freezing Risk-Adjustment Payments to Health Insurers Will Make Markets More Unstable
Last week, the Centers for Medicare and Medicaid Services (CMS) unexpectedly halted the risk-adjustment program that spreads the expense of covering high-cost enrollees across health insurers in the individual and small-group markets. As Georgetown University’s Dania Palanker and JoAnn Volk explain on To the Point, the Trump administration's action came in response to a lawsuit from a New Mexico insurance co-op claiming the current risk-adjustment formula is unlawful because small insurers, including co-ops, are more likely to face high charges.
With insurers and some states predicting higher premium rates and fewer plan choices following the payment freeze, both are urging the administration to find a quick resolution.
In the meantime, suspending the risk-adjustment program will only inject more uncertainty in individual and small-group markets already facing numerous federal policy changes, write Palanker and Volk. These include the elimination of the individual mandate penalty, changes to association health plans, and expansion of short-term health plans.
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