This week, the Center for Consumer Information and Insurance Oversight (CCIIO) released new guidance for insurers on how to inform consumers about their new health insurance options under the Affordable Care Act (ACA). The guidance also includes model language that insurers can use when communicating with their enrollees about renewing their policy.
Why is this important? Beginning in January, individual market insurers face sweeping new reforms that require them to guarantee issue policies to applicants, regardless of their health condition, eliminate the use of pre-existing condition exclusions, and stop charging higher rates based on health status and gender. These critical reforms will help make insurance coverage more accessible, adequate, and affordable to people with pre-existing conditions.
However, insurers continue to have strong incentives to cherry pick people with the healthiest risk profiles. And, because insurers can no longer use their traditional tools for segmenting risk, they might revert to subtler means of discrimination, such as marketing targeting healthy people to apply and encouraging sicker enrollees to shop elsewhere.
Under federal law, these kinds of discriminatory marketing practices have been prohibited. Federal rules prohibit individual market insurers from using marketing practices that have the effect of discouraging the enrollment of people with significant health needs, and insurers participating in the health insurance exchanges are similarly constrained. And a previous federal law, the Health Insurance Portability and Accountability Act (HIPAA) requires insurers to renew people’s policies, regardless of their health status, except in certain limited circumstances (such as moving out of the insurer’s service area or failing to pay premiums).
As we approach the start of open enrollment into health insurance coverage that must comply with the ACA’s reforms, there’s a risk that some insurers will use the opportunity to shed some of their sicker enrollees. While insurers can’t just drop these folks, they could use deceptive marketing materials or notices to direct them to other coverage or to the exchange. For many of these individuals, accessing new coverage on the exchange is likely to be a better deal, particularly if they are eligible for premium tax credits and cost-sharing assistance. But not everyone will want to leave their current plan, and enrollees should be provided with all the information they need to make informed decisions.
Fortunately, CCIIO’s recent guidance indicates that discriminatory marketing tactics will not be permitted. Instead, insurers are encouraged to use CCIIO’s model language to educate consumers about their new coverage options under the ACA, including the availability of premium tax credits and cost-sharing assistance on the exchanges:
You and your family may soon have new options for health care coverage. Starting on October 1, 2013, the Health Insurance Marketplace will offer a new alternative for purchasing health insurance plans. You can preview your premium, deductibles, and co-payment costs before you make a decision to enroll in a plan, and determine whether you qualify for assistance to reduce these costs.
You can continue to purchase coverage from us in the Marketplace. You may find your premiums are lower due to a new kind of tax credit in the Marketplace. You might also qualify for plans with reduced deductibles and co-payments. Even though help with premiums, deductibles, and co-payments isn’t available outside the Marketplace, the healthcare law also guarantees that you can choose a new plan outside the Marketplace even if you have a preexisting condition.
Find out more at www.healthcare.gov.
Insurers aren’t required to use this language, but if they do, they won’t fall under federal scrutiny for falling afoul of federal marketing rules.
For further updates on implementation of the ACA, stay tuned to CHIRblog!