Last month, the Department of Health and Human Services (HHS) issued a proposed rule focused on stabilizing the individual health insurance marketplaces. Among other provisions, the rule proposed significant changes to guaranteed issue—allowing insurers to condition enrollment on the repayment of past-due premiums; shortening the open enrollment period; and restricting the use of special enrollment periods (SEPs), in addition to requiring that state-based marketplaces implement a pre-verification process. To better understand stakeholder concerns and recommendations to these proposals, we pulled a sample of comments submitted by health insurers, consumer advocates, and state-based marketplace officials. The first two are summarized in Parts 1 and 2 of this series. This blog, Part 3, summarized responses from the state-based marketplaces.
In Part 3 of this analysis, we’ll look at how fifteen of the seventeen state-based marketplaces reacted to the proposed rule. Kentucky and Maryland did not submit official comments.
- Arkansas Health Insurance Marketplace
- Covered California
- Connect for Health Colorado
- Access Health Connecticut
- DC Health Benefit Exchange Authority
- Your Health Idaho
- Massachusetts Health Connector
- Nevada Silver State Health Insurance Exchange
- New Mexico Health Insurance Exchange
- New York State of Health
- Oregon Department of Consumer and Business Services
- HealthSource RI
- Department of Vermont Health Access
- Washington State Health Benefit Exchange
Guaranteed Issue: Most State-Based Marketplaces Believe Conditioning Enrollment on the Past-Payment of Premiums Will Generate Consumer Confusion
Only one state marketplace—Idaho—that commented on the guaranteed issue proposal explicitly supported CMS’ recommendation that insurers be allowed to require consumers who were previously terminated due to non-payment, to repay past-due premiums. The majority of state-based marketplaces commented that such a process would likely create consumer confusion and technical errors that “…could delay enrollment and medical care for some of the most medically fragile that may, in fact, not owe back-payments” (New Mexico). Several states, including Colorado and Massachusetts, noted that marketplaces would need to make significant system updates and IT enhancements in order to transfer new enrollment and payment information to insurers, which would require “a large amount of resources at considerable expense…” (Colorado). Massachusetts further suggested that insurers or exchanges be required to provide notice to consumers if they are denied coverage under this policy. While many called for state flexibility and delayed implementation, the D.C. and Vermont marketplaces opposed the proposal and questioned whether it, in fact, violates current statute.
Open Enrollment Period: The Majority of State-Based Marketplaces Oppose A Shortened Open Enrollment
Of the thirteen states that specifically commented on the length of the open enrollment period, seven directly opposed reducing the timeframe, five outlined notable concerns, and only one—New Mexico—supported adjusting the timeframe in order to align enrollment with Medicare Advantage. In direct contrast, California, Connecticut, Minnesota, and Oregon all noted that aligning marketplace and Medicare enrollment would create unnecessary burdens for agents and brokers, forcing them to juggle two books of business in less time. Several states raised concerns about IT capacities, explaining that surges in volume would stress online platforms “…resulting in system failures and decreased enrollment…” (Nevada). Colorado estimates that the initial cost for completing system stabilization enhancements exclusively for this provision would range from $350,000 to $450,000. Similarly, New York stressed that average call volumes would increase exponentially, rising from an average of 32-34,000 calls daily to 60,000 calls daily, with wait times far exceeding the 5-minute standard—reaching two hour waits on peak days.
Beyond staff and technical capacity, several marketplaces shared the concern that a reduced enrollment period would have a major adverse affect on their risk pool. California explained that in the first few weeks of 2016 enrollment, the average enrollee’s risk score was slightly high, at 1.02. However, in the final weeks of enrollment, the average score fell to 0.93. A similar analysis by Colorado found that the second half of open enrollment—after December 15—“brings a 9 percentage point increase in younger, likely healthier, enrollees.” This means that shortening the open enrollment period would not only likely lead to decline in total sign-ups, but importantly, would risk the enrollment of young, healthy consumers who traditionally sign-up later—further degrading the risk mix.
Special Enrollment Periods: Most Marketplaces Urge CMS to Allow for State Flexibility in SEP Verification
While a small collection of state-based marketplaces—D.C., New York, Rhode Island, and Vermont—strictly opposed the “one-size fits all requirement” (New York) that marketplaces verify 100 percent of SEP requests; only Idaho stood in full support of the provision. Most states fell somewhere in the middle, noting that the verification of SEPs can be an important step to curbing abuse and encouraging enrollment, but that state flexibility is critical, as many marketplaces are already developing their own verification systems. Some states called for a gradual phase in of verification, for instance, allowing “a statistically significant percentage” of consumers to enroll without pre-verification (Oregon), or “utilizing a pilot program” (Arkansas), which is already scheduled to occur next year.
Regarding changes to specific SEPs, several states cautioned that strict enforcement would likely increase the uninsured and deter healthy, valid enrollments. Again, states called for flexibility to implement a local approach, as Vermont wrote, “While not conceptually opposed to the proposed regulatory changes,” it wants to “make an independent determination about whether and when to implement the proposed policies.”
Take Away: Unlike most health insurers who largely supported the three major changes proposed, and consumer advocates who largely opposed them, the state-based marketplaces expressed mixed reactions to the provisions. Most outlined technical and financial concerns with proposed changes to guaranteed issue and SEP verification, while the majority rejected a shorter enrollment period. Notably, the marketplaces spoke consistently about the impacts these modifications could have on their risk pools, knowing all too well that barriers to enrollment can destabilize their markets, driving prices up and insurers out.