Column: The Trump administration finds another way to throw sand in Obamacare’s gears, at patients’ expense

It has now become clear that Trump officials’ approach to the Affordable Care Act is to sit in conference and look for new ways to sabotage the law with minimal rationale and just for the hell of it. And by “hell,” we mean in ways that will impose new costs on premium payers.

The latest example emerged over the weekend, when the Department of Health and Human Services announced it was suspending an ACA program known as risk-adjustment.

At stake is $10.4 billion in payments due ACA insurers for the 2017 plan year and an undetermined amount for this year. That may not mean a lot in the aggregate, but the suspension will hit some insurers, especially small co-ops, hard, and could drive them out of business.

Andrew Slavitt, who oversaw the ACA during the Obama administration, calls the Trump action “aggressive and needless sabotage” and its “impact likely chaos.” More to the point, the action may well drive insurers out of the individual health coverage marketplace, resulting in less choice and higher premiums.

That possible outcome places the administration’s latest move squarely in the category of steps it has taken to undermine the ACA by administrative means, as a way around the Republican-controlled Congress’ repeated failure to repeal the act.

The Trump White House has withdrawn its defense of the act in a Texas federal court, forcing a coalition of 16 states to step in as defense counsel. It approved changes in Medicaid expansion terms that would likely strip hundreds of thousands of Americans of coverage; those changes have been tossed out by a federal judge on grounds that the administration had no grounds to approve them. More on those in a moment.

Risk adjustment affects health insurers in the individual market. Those that have acquired unexpectedly healthy customer pools are required to send payments to those with unexpectedly unhealthy pools. The goal is to discourage insurers from gaming insurance plan design to appeal to the healthiest customers.

Risk adjustment isn’t novel or unique to the Affordable Care Act. It’s a permanent part of Medicare Advantage and the Medicare Part D prescription drug plans, and it makes sense in any program that gives multiple contractors flexibility to design their offerings as they compete for the same large customer base.

The ACA’s risk adjustment methodology has been challenged by insurers newly entering the marketplace. They say it places them at a disadvantage relative to larger, established insurers, because it makes their customer base appear to be sicker and thus dings them for adjustment payouts. A federal judge in Massachusetts rejected the argument, but a federal judge in New Mexico accepted it.

In announcing the suspension, Seema Verma, who as head of the Centers for Medicare and Medicaid Services (CMS) is the nominal overlord of the ACA, said, “We were disappointed by the court’s recent ruling. As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”

Nicholas Bagley, a health insurance expert at the University of Michigan law school, wrote in response: “I don’t buy it. Neither should you.”

To begin with, federal Judge James O. Browning issued his ruling on Feb. 28. There have been proceedings since then, and the decision runs 83 pages, but surely HHS could have read it all before now and crafted an administrative response short of suspending the program while insurers are awaiting $10.4 billion in payments.

Bagley doesn’t think much of Browning’s reasoning, which was based on CMS’ failure to justify its requirement that the risk adjustment program be “budget neutral” — that the money paid out by insurers with healthier pools equal the money paid in to those with sicker customers. (Bagley argues that the principle was so obvious to CMS rulemakers that it didn’t need to be spelled out.)

But he’s more critical of the administration’s decision to suspend the program instead of working around the ruling. CMS could have adopted a rule to address Browning’s decision — indeed, the agency already has done so for 2019. It could have filed a notice of appeal and obtained a stay of the ruling. “The truth is that the Trump administration has lots of options,” he writes. “It’s just choosing not to exercise them.”

Instead, the administration chose the most disruptive option.

And not for the first time. On June 29, U.S. District Judge James E. Boasberg of the District of Columbia tossed out Kentucky’s attempt to add a work requirement and premium charges to its Medicaid program.

Boasberg found that Health and Human Services Secretary Alex Azar approved the work requirements and other changes — a uniquely punitive approach to Medicaid — without seriously considering how they would fulfill Medicaid’s statutory purpose, which is to bring affordable healthcare to low-income households.

This wasn’t a stretch for Boasberg: Kentucky officials, acting at the direction of the state’s Republican tea party Gov. Matt Bevin, had projected that 95,000 of Kentucky’s 1.2 million Medicaid enrollees would lose their eligibility within five years under the new rules. Patient advocates calculated as many as 300,000 might be affected. “The secretary paid no attention to that deprivation,” the judge found, and papered over his failure with “sleight of hand” arguments, rendering his approval of the program “arbitrary and capricious.”

In fact, the Trump administration’s approval of work requirements for Medicaid for the first time was an act of hasty ideological sabotage. HHS issued a letter to all governors fleshing out its receptiveness to work requirements on Jan. 11, 2018, and approved Kentucky’s application on Jan. 12. At least seven other states with GOP-dominated statehouses — Arizona, Arkansas, Indiana, Kansas, Maine, Wisconsin and Utah — have been waiting in the wings to undercut Medicaid in the same way, but they may now have to wait.

Then there’s the abandonment of the defense of the ACA in a Texas federal court. There, the Department of Justice has chosen to declare much of the act unconstitutional, on flagrantly fatuous grounds. Its filing would eviscerate the act’s protections for Americans with existing medical conditions, a population the GOP swore in the past to protect at all costs.

As Slavitt observed after that action last month, people who care about public health or the rule of law don’t act this way; when a legal obstacle arises, they look for ways to uphold the law and serve their constituents. The administration has turned that principle on its head, and why not? President Trump himself has said he’s “gutted” the ACA, and said so with pride. This weekend, he showed that he’s not done sharpening the knives yet.

Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email michael.hiltzik@latimes.com.

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