The U.S. Health and Human Services Department announced Wednesday that it would be cutting off federal funding to private health insurance plans that do not offer comprehensive coverage for children, seniors and adults.
The agency will allow insurers to provide health coverage only for those who are not covered by government programs or plans.
The announcement comes as Republicans push to roll back the Affordable Care Act, or Obamacare, by rolling back subsidies, which are intended to help low- and middle-income Americans afford private insurance.
“The U. S. Department of Health and Labor’s (HHS) announcement today will help ensure that the health care community can continue to meet the health needs of the American people, regardless of who they are,” HHS Secretary Kathleen Sebelius said in a statement.
Sebelius said the HHS announcement will also provide more clarity to Americans about what plans are covered, what the protections are and what the costs are for these plans.
Health insurers have been asking the government for billions in funding to expand coverage for millions of people.
They’ve been concerned that the Obama administration would not allow insurers access to the subsidies to expand their networks.
Many have also worried that if the government cuts off federal payments to insurers, the industry could collapse.
The Trump administration said Wednesday that the new plan is designed to help families afford insurance, as well as provide health insurance coverage for people with pre-existing conditions.
The plan would also include a tax credit to help people pay for insurance.HHS said it would also provide health care providers a one-time cash infusion of $25 billion to expand access to coverage for low-income and older adults.
It also said it will give health insurance providers up to $15 billion to develop new products and services for people who need them most.
“This plan will help protect families and provide better health care to Americans, and will also allow for a faster transition for people to the new marketplaces,” Sebelious said in the statement.
“I am pleased that the Department of HHS is recognizing the important work that health care professionals are doing to support families by improving the health outcomes for their families,” Sebenius said.
A federal appeals court has upheld the subsidies, allowing them to go into effect for those with pre.existing conditions, but the government said Wednesday it will allow insurance companies to continue to use the money for other things.
Insurers had complained that the subsidies were not enough to cover the cost of coverage, and many said they were concerned the Trump administration would use the funding to eliminate other consumer protections.
In a statement, the American Academy of Actuaries called the government action a victory for consumers.
“As the ACA’s primary beneficiary, the ACA has been an effective means for protecting consumers and improving access to health care,” said AMA President Michael Berenson.
“The administration’s decision to restore the subsidies ensures that the American health care system is fully compliant with the ACA and continues to deliver quality care.”
“While the ACA was initially enacted to expand health insurance to millions of Americans, we now know that its goals are achievable through the implementation of the Affordable Healthcare Act,” Berensons statement said.
“We are pleased that HHS has recognized the importance of this vital provision.”
The AHRC said the move would help to reduce premiums for all Americans, which has been a major concern of some insurers.
For years, some insurers have pushed for the subsidies for their lowest-income customers.
They said the subsidies provided them a way to afford the coverage they were seeking and that they have made significant savings through the program.
But they also warned that they were facing increased competition and lower costs from other insurers.
The American Medical Association said in its statement that it is concerned that with the subsidies cut off, insurers would lose the money they had invested in the program and that the number of people who are insured would decrease.