Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.The health law allows people who lose other coverage, families with new children and others in certain circumstances to buy insurance after enrollment season ends. In most states the deadline for 2016 coverage was Jan. 31.Last year, these “special enrollment” clients were much more expensive than expected because lax enforcement allowed many who didn’t qualify to sign up, insurers said. Nearly a million special-enrollment customers selected plans in the first half of 2015, half of them after losing previous coverage.In addition, Cigna and Humana, another big health insurer, have ceased paying brokers to sell many higher-benefit “gold” marketplace plans for individuals and families while continuing to pay commissions on more-profitable, lower-benefit “bronze” plans, according to documents and interviews.
This is a development that should be followed closely because it hints at fundamental problems with the implementation of the keystone policy bargain of the Affordable Care Act’s individual market reforms. Health plan issuers agreed to forgo medical underwriting and accept all applicants regardless of health status and medical history. Provided everyone not covered by an employer or government-paid health plan have continuous, year round coverage.
This story suggests that at least some consumers aren’t keeping up their end of the policy bargain to be continuously covered and are gaming the rules that allow enrollment outside of three-month-long annual open enrollment period for those who lost employer-sponsored coverage, moved or had a change in family status and other life circumstances. They are effectively using coverage actuarially designed for annual enrollment terms as short term coverage of less than one year since according to some insurers, they’re dropping their coverage soon after signing up under the special enrollment provisions. And since they’re only in for the short term, they’re inclined to select plans that have the lowest out of pocket cost sharing: gold and platinum plans. (Plans sold as short term coverage aren’t covered by the Affordable Care Act’s individual market reforms. Pre-existing conditions can be excluded and they typically offer a much narrower scope of benefits than ACA-compliant plans).
The Obama administration apparently recognizes this issue undermines the individual market reform framework. Andy Slavitt, acting administrator of the Centers for Medicare and Medicaid Services, told a J.P. Morgan health-care conference in San Francisco last month that CMS will tighten up its rules governing special enrollments outside of the annual open enrollment period, according to The Wall Street Journal.
Clearly, more information is needed to better understand this phenom. For example, are peoples’ lives so subject to changing life circumstances that most anyone can qualify for special enrollment, mooting the annual enrollment periods? Does “waiting to get sick” as reported in mainstream media as a driver for special enrollments really mean getting high cost elective procedures given that most people aren’t able to time when they will develop a serious illness or be injured in an accident? If consumers are defrauding the special enrollment rules by falsely claiming a life event, is that part of the “culture of coping” the Affordable Care Act is intended to reduce, with consumers too financially pinched to pay their premiums for the entire year, even with advance premium tax credits?
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email