Health insurers warn of premium hikes after Trump withholds ObamaCare payments

Health insurance papers.
(Image credit: iStock)

On Sunday, the insurance industry and outside analysts warned that the Trump administration's decision Saturday to at least temporarily withhold $10.4 billion in risk-adjustment payments to insurance companies will likely drive up premiums and might force more insurers out of the Affordable Care Act's marketplace. The risk-adjustment payments are a mechanism the ACA — also known as ObamaCare — uses to reimburse insurance companies for covering people with pre-existing conditions and chronic illness, ostensibly paid for by profitable insurers with relatively healthier clients.

Creating this "new market disruption" at the "critical time" when insurers are setting next year's premiums "will create more market uncertainty and increase premiums for many health plans — putting a heavier burden on small businesses and consumers, and reducing coverage options," the insurance industry group America's Health Insurance Plans (AHIP) said in a statement. "And costs for taxpayers will rise as the federal government spends more on premium subsidies." Eric Hillenbrand at AlixPartners consulting group said the move will affect whether insurers decide to "participate in the exchanges" as well as "what premiums to charge if they do."

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.