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The Trump administration will suspend the ACA's risk adjustment. Photo: Karen Bleier/AFP via Getty Images

The Trump administration may suspend a permanent Affordable Care Act program that prevents health insurance companies from cherry-picking healthy people in the individual marketplaces, the Wall Street Journal reports.

Why it matters: If the government halts the program, called risk adjustment, at a minimum insurers that were expecting payments would hike ACA premiums to make up for big losses. But it also could "inject chaos and uncertainty into the individual insurance market," according to Larry Levitt of the Kaiser Family Foundation, if insurers decide to quit next year.

How it works: Under risk adjustment, insurers that enroll healthier-than-average people compensate insurers that enroll sicker-than-average people. The end result is supposed to be a zero-sum program that encourages companies to sell health plans to all people regardless of their medical histories.

  • Without this compensation mechanism, insurers will have an incentive to avoid enrolling sick people by making plans unattractive to people who have costly diseases.
  • Or insurers could decide to bail on the marketplace if they think it's no longer worth the headache.
  • Risk adjustment was the only permanent health insurer payment program under the ACA. The other two, risk corridors and reinsurance, lasted three years.
  • The federal government was supposed to release a report about the risk adjustment program at the end of June, but it's being held up by litigation from insurers that have argued the program's formula is flawed.

Flashback: The Trump administration similarly undermined ACA insurer payments last year when it stopped paying insurers subsidies that helped low-income people in the ACA marketplaces with their deductibles and out-of-pocket costs.

Go deeper

50 mins ago - Sports

China pulls Celtics games after Enes Kanter criticizes Xi Jinping

Celtics center Enes Kanter. Photo: Jim Michaud/MediaNews Group/Boston Herald via Getty Images

China will no longer stream Boston Celtics games after center Enes Kanter called Chinese President Xi Jinping a "brutal dictator" in a social media post over the Chinese government's repressive policies in Tibet, according to the New York Times.

Why it matters: Kanter's criticism of Beijing has sparked another round of trouble for the NBA in China, one of its largest and most restrictive markets.

Dan Primack, author of Pro Rata
2 hours ago - Politics & Policy

Trump's new venture could be peak SPAC

Illustration: Sarah Grillo/Axios

Former President Trump last night announced plans to launch a digital media network called "Truth Social," and said it would go public via a SPAC called Digital World Acquisition (Nasdaq: DWAC).

What to know: So far, this is a joke. The press release didn't contain even basic information, such as the new company's CEO. In fact, the only execs mentioned are Trump (as chairman) and veteran TV producer Scott St. John as head of a subscription streaming service.

Ben Geman, author of Generate
2 hours ago - Economy & Business

Tesla is outrunning the supply chain crunch

Expand chart
Data: FactSet and company release; Chart: Will Chase/Axios

Tesla, citing a "structural shift" in demand for electric vehicles, reported its highest-ever quarterly profit of $1.6 billion and $13.8 billion in revenues despite supply chain problems.

The big picture: The company's third-quarter report says the chip shortage, port congestion and other woes have affected its factories but argues that "flexibility" and "ingenuity" are a counterweight.

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