- Joined
- Aug 10, 2013
- Messages
- 20,181
- Reaction score
- 21,525
- Location
- Cambridge, MA
- Gender
- Male
- Political Leaning
- Slightly Liberal
The ACA requires insurers to lower deductibles, co-pays, and other out-of-pocket spending for low income people so that they can afford to use their insurance. In return, the feds are supposed to reimburse those insurers for those additional expenses.
When Trump reneged on making those reimbursements in late 2017 insurers responded by jacking up premiums to recoup the lost revenue--that's part of the mechanism by which Trump triggered the largest premium jump the marketplaces have yet experienced.
That made for some weird dynamics in the markets but the truly odd part is that insurers are now winning back in court the funds Trump reneged on--revenue those insurers already recouped, largely at Uncle Sam's expense, through the Trump-induced premium spike. Talk about double dipping!
Courts hammer Trump for sabotaging Obamacare, in rulings that could cost the Treasury billions
What a tangled web.
When Trump reneged on making those reimbursements in late 2017 insurers responded by jacking up premiums to recoup the lost revenue--that's part of the mechanism by which Trump triggered the largest premium jump the marketplaces have yet experienced.
That made for some weird dynamics in the markets but the truly odd part is that insurers are now winning back in court the funds Trump reneged on--revenue those insurers already recouped, largely at Uncle Sam's expense, through the Trump-induced premium spike. Talk about double dipping!
Courts hammer Trump for sabotaging Obamacare, in rulings that could cost the Treasury billions
Legal experts thought that one of President Trump’s cruder attacks on the Affordable Care Act would come back to bite him once the courts took a crack at it.
Court rulings have flooded in over the last few weeks, and the experts are right. The cost to the government could be $12 billion a year, payable to health insurers who were cheated by Trump’s action. That’s not chump change. As Nicholas Bagley of the University of Michigan wrote this week, “Insurers could buy us a damn border wall every year with that money.”
Many experts predicted that this [canceling cost-sharing reduction reimbursements to insurers] wouldn’t work, since creditors armed with a government promise to pay could go to the Court of Federal Claims, which has the power to order the government to pay up even when Congress hasn’t appropriated the necessary funds. (The payments come from a separate Judgment Fund, a permanent, uncapped fund established for claims such as these.)
So far, more than 90 insurers, including scores brought into court as part of a class-action lawsuit, have won their cases before the Court of Claims. The rulings are coming from Wheeler and his bench colleagues Margaret M. Sweeney, who decided the class-action case on Feb. 15, and Elaine D. Kaplan, who ruled in a Montana case in September. As Bagley observed, “None of these judges bought the Justice Department’s rationale for refusing to pay. And good reason: it’s garbage.”
What’s most interesting about these rulings, the experts say, is that they apply to expenses that the insurers essentially worked their way around in 2018, through a maneuver known as “silver loading.”
Essentially, the insurers calculated their potential losses from the CSR suspension, then raised their premiums for benchmark silver ACA plans to cover the losses. This was done with the agreement of state regulators, including Covered California, which oversees ACA plans in that state.
Because the benchmark plan also sets the level of premium subsidies for all ACA plans, this turned out to be a boon to millions of ACA buyers — the subsidies increased to the point that they made higher-benefit gold and platinum plans cheaper and, in many cases, made lower-benefit bronze plans free for buyers. The U.S. Treasury ended up eating the higher cost.
As it happens, it may not be the insurers that reap the benefit, but their customers. That’s because the ACA sets limits of up to 20% on the gross profits that insurers can earn from the ACA plans and requires them to rebate the excess to the customers.
What a tangled web.