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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

12 mins ago - Politics & Policy

Kevin McCarthy's rude awakening

House Minority Leader Kevin McCarthy. Photo: Mark Wilson/Getty Images

Kevin McCarthy is learning you can get torched when you try to make everyone happy, especially after an insurrection.

Why it matters: The House Republican leader had been hoping to use this year to build toward taking the majority in 2022, but his efforts to bridge intra-party divisiveness over the Capitol siege have him taking heat from every direction, eroding his stature both with the public and within his party.

The next big political war: redistricting

Illustration: Aïda Amer/Axios

Democrats are preparing a mix of tech and legal strategies to combat expected gerrymandering by Republicans, who are planning to go on legal offense themselves.

Why it matters: Democrats failed to regain a single state legislature on Election Day, while Republicans upped their control to 30 states' Houses and Senates. In the majority of states, legislatures draw new congressional district lines, which can boost a party's candidates for the next decade.

43 mins ago - Politics & Policy

Vaccinations, relief timing dominate Sweet 16 call

Sen. Joe Manchin (D-W.V.) speaks during a news conference in December with a group of bipartisan lawmakers. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images

Vaccine distribution, pandemic data and a cross-party comity dominated today's virtual meeting between White House officials and a bipartisan group of 16 senators, Senator Angus King told Axios.

Why it matters: Given Democrats' razor-thin majority in both chambers of Congress, President Biden will have to rely heavily on this group of centrist lawmakers — dubbed the "Sweet 16" — to pass any substantial legislation.

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