Moneybox

The Trump Administration Just Took a Sincere Step to Fix a Piece of Obamacare

WASHINGTON, DC - JANUARY 16:  U.S. President Donald Trump (L) acknowledges the audience as Administrator of the Centers for Medicare and Medicaid Services Seema Verma (R) looks on as he stops by a Conversations with the Women of America panel at the South Court Auditorium of Eisenhower Executive Office Building January 18, 2018 in Washington, DC. The three-part panel features ÒAmerican women from various backgrounds and experiences who will speak with high-level women within the Trump Administration, about what has been accomplished to date to advance women at home, and in the workplace.Ó (Photo by Alex Wong/Getty Images)
Donald Trump and Administrator of the Centers for Medicare and Medicaid Services Seema Verma.
Alex Wong/Getty Images

It’s sort of sad that this is a man-bites-dog story, but the Trump administration has apparently decided to fix an important and legally troubled piece of the Affordable Care Act, reversing an earlier move that appeared to be yet another thinly veiled attempt at sabotaging the law.

On Tuesday, the Centers for Medicare and Medicaid Services issued a new version of the regulation governing Obamacare’s risk-adjustment system, which stabilizes the individual insurance markets by redistributing money from carriers with unusually healthy customers to those with unusually sick customers. Earlier this month, the government had unexpectedly halted payments under the program, claiming that it had to do so because a federal district court judge in New Mexico had struck down the government’s risk-adjustment formula in February. (It’s worth noting that the judge’s decision was particularly nit-picky, essentially concluding that the government hadn’t sufficiently justified a piece of the formula in writing during the official rule-making process.) Insurance companies warned that the move could eventually push premiums higher by throwing more uncertainty into the market. The new interim final rule is designed to address some of the court’s concerns and allow the risk-adjustment money to flow as normal.

“This rule will restore operation of the risk adjustment program, and mitigate some of the uncertainty caused by the New Mexico litigation,” CMS Administrator Seema Verma said in a statement. “Issuers that had expressed concerns about having to withdraw from markets or becoming insolvent should be assured by our actions today. Alleviating concerns in the market helps to protect consumer choices.”

A number of legal experts questioned the administration’s initial decision to pause the risk-adjustment program, suggesting that it may have been an opportunistic move to hobble the ACA, similar to past decisions the president has taken to undercut the law. They pointed out that the federal government rarely if ever stops programs based on a single lower-court ruling (notably, a district court judge in Massachusetts had upheld the formula) and that there were many steps the feds could have taken short of stopping payments outright. One of the most obvious actions, they said, was issuing an interim rule, of the sort CMS produced this week.

The risk-adjustment program isn’t quite out of the woods yet—the judge in New Mexico could theoretically decide the new rule still doesn’t satisfy his concerns. But this is an important step toward fixing the situation. In other words, it seems like we’re getting a rare glimpse of what it looks like when the Trump administration tries to repair Obamacare, rather than hammering at its cracks to try to bring the whole thing crashing down.