WASHINGTON – The Trump administration's decision to undo a three-week-old policy that threatened to drive up health insurance premiums for individuals came with a sigh of relief for insurance companies in Minnesota.

The federal Centers for Medicare & Medicaid Services (CMS) on Tuesday abandoned its plan to stop collecting and making risk-adjustment payments to stabilize individual health insurance markets.

The government had said a court case questioning calculations of the payments made the move necessary.

Insurance companies and some worried Republican politicians pushed back hard, saying risk adjustment made insurance plans with the sickest policyholders able to continue to offer coverage at affordable prices. Without risk adjustment, they said, people would lose coverage because of unaffordable premiums or the disappearance of companies from the individual marketplace.

"We're doing all we can to insulate Minnesotans from this silliness," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group.

In 2017, the state moved roughly $70 million in premiums between insurance plans with healthier clients and those with sicker ones to keep things stable as part of the Affordable Care Act. The transfers involve no tax dollars.

CMS "stopped the program and didn't tell anyone what was going to happen," Schowalter said. "I don't know their intent. It's good that this has been resolved and resolved quickly. It's a bad way to do business."

CMS issued a rule Tuesday reinstating risk-adjustment payments.

Administrator Seema Verma said insurance companies which "expressed concerns about having to withdraw from markets or becoming insolvent should be assured by our actions today."

A Star Tribune analysis of federal data show that Eagan-based Blue Cross and Blue Shield of Minnesota is due about $44.2 million in risk adjustment payments for 2017. Minneapolis-based UCare is due $17.2 million; Minnetonka-based Medica, nearly $10.3 million. Bloomington-based HealthPartners is expecting to pay $65.8 million.

Health insurance specialists and those who study national health care reform were puzzled why the government did not issue a rule in the first place.

"Cutting off the whole thing didn't make sense," said Washington and Lee University Law Prof. Tim Jost. "But I don't know the political calculus."

Matthew Fiedler, a fellow at the Brookings Institution's Center for Health Policy, also declined to speculate on the motives of the Trump administration, which has made getting rid of the Affordable Care Act a top priority.

"Was this an effort to further undermine the ACA or was someone just asleep at the wheel?" Fiedler asked. "I don't know. All I know is they could have [issued a rule] all along."

Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation and a former health adviser to President Bill Clinton, said CMS reversed itself fast enough to avoid lasting damage to the system.

"I don't think insurance companies were crying wolf," Levitt said. "This came out of the blue as insurers were setting their premiums for next year. If it had continued, it would have been a big deal."

Even though risk-adjustment payments involve no tax dollars and are transfers from one insurer to another, Levitt said stopping the payments would have caused chaos in the individual health insurance market and some people would not have been able to afford or find coverage. Government officials running the program had to know that, Levitt said.

A new Kaiser poll shows how the president and Republicans running in midterm elections could pay a price. The poll shows that 56 percent of participants believe the Trump administration is trying to make the ACA fail, and seven times more participants think that is a bad thing than think it is a good thing.

The Kaiser poll also shows that 58 percent of participants will blame the GOP, which controls Congress and the White House, if things go wrong with health care.

Jim Spencer • 202-662-7432