“We are very discouraged by the new market disruption brought about by the decision to freeze risk adjustment payments,” said Matt Eyles, the president and chief executive of America’s Health Insurance Plans, a trade group for insurers.
He predicted that costs to taxpayers would rise because the government provides subsidies that increase along with premiums. Those premium subsidies, for low- and moderate-income people, will continue.
The decision in February, by Judge James O. Browning, voided the formula used by the federal government to calculate risk adjustment payments each year from 2014 to 2018. The amount at stake just for 2017 is $10.4 billion. The payments shuffle money among insurers, from those with healthier customers to those with less healthy members who have a higher risk of using costly medical care.
Trump administration officials said they were caught between two conflicting court rulings. The New Mexico ruling prevents the government from making further collections or payments under the risk adjustment program using the current formula, they said. But, they added, in January a federal district judge in Massachusetts upheld the method used by the government to calculate risk adjustment payments.
While insurers warned of market turmoil if the payments were withheld, Dr. Martin E. Hickey, the founder of New Mexico Health Connections, the company that filed the lawsuit in that state, said the court ruling there would benefit consumers.
“The risk adjustment formula was extremely biased in favor of large, established insurers and discriminated against new and small insurers, including co-ops like ours,” Dr. Hickey said in an interview on Saturday.
“People spin the administration’s decision as Trump trying to do harm, but it’s exactly the opposite,” Dr. Hickey said. “It will allow more companies to get into the insurance market. That will increase competition, and competition will help keep prices down.”