State Options Blog Series: Streamlined, Direct Marketplace Enrollment Has Risks, Benefits, but Much Depends on State Oversight

We’re in the midst of open enrollment (OE) for 2018 coverage in the marketplaces, and there’s considerable concern that the many challenges accompanying this OE will result in far fewer people enrolled in coverage. Open enrollment this year will be just half the time of previous open enrollment periods – 6 weeks, beginning November 1st – and there will be fewer resources to help people enroll in coverage.

Funding for Navigators in federally facilitated marketplaces (FFMs) has been cut by 40 percent, with cuts to some individual organizations deep enough to prompt them to close down. The Administration has cut funding for outreach by 90 percent and already announced planned shutdowns for healthcare.gov that will further winnow the time available to enroll. Add to that the uncertainty about the future of the Affordable Care Act, reports that the ACA’s individual mandate will be relaxed or repealed, and confusion about the status of marketplace offerings and premiums, and it’s reasonable to expect far fewer consumers will successfully enroll in coverage for 2018. That’s a big deal, not just for the health of the individuals who may wind up without coverage, but for the health of the marketplaces, too.

One enrollment option that may play a bigger role this year is enrollment through web-based brokers or insurer sites, a pathway designated in federal rules as “direct enrollment.” One web-based enrollment site, HealthSherpa, followed the Administration’s announcement of planned outages for healthcare.gov with a statement that said it can help consumers enroll in marketplace plans even when healthcare.gov is down for “scheduled and unscheduled downtime.”

What is direct enrollment?

Federal rules allow consumers to enroll in marketplace plans in FFMs either through healthcare.gov or by direct enrollment through web-based broker or insurer sites. Direct enrollment sites must meet requirements to ensure consumers can see all marketplace plan options, not just those promoted by the site. Plans must also be displayed in a manner similar to the plan display on healthcare.gov – to protect against consumers being steered toward certain plans – unless federal regulators approve a display that is different. Agents and brokers using direct enrollment sites must register with healthcare.gov, complete training on marketplace plan options and financial assistance available to qualifying consumers, and meet marketplace privacy and security standards. And consumers must be able to withdraw from enrolling through the website at any time and instead use healthcare.gov to complete their enrollment.

How is it different this year?

The Trump Administration released guidance to implement a streamlined process known as “Proxy Direct Enrollment.” Under Obama-era rules, consumers using web-based brokers were re-directed to healthcare.gov to submit their household and financial information to receive an eligibility determination for financial assistance, and then could return to the broker or insurer site to complete their enrollment. Under the new rules that apply to the OE underway, web-based brokers can collect household and financial information from consumers and transmit the information to healthcare.gov to get an eligibility determination. Consumers need not leave the web-based broker or insurer site for any part of the application and enrollment, although consumers retain the right to leave the site at any time.

Issues for consumers

Streamlining enrollment through web-based brokers could help boost the marketplaces by providing new avenues for consumers to enroll into coverage. And they may play a bigger role in next year’s open enrollment if proposed changes to the Navigator program are finalized and result in even fewer in-person assisters. However, empowering these enterprises to manage this transaction raises a number of potential issues for consumers and for the marketplace risk pools. Among the concerns are the privacy and security of consumers’ sensitive financial information and whether consumers might be inappropriately steered to plans for which the web-broker receives a better commission. Specifically, many web-based brokers sell policies other than marketplace plans, such as underwritten short-term limited duration plans. As major medical insurers reduce broker commissions for individual market products, some brokers may have financial incentives to steer healthy consumers to these short-term or other unregulated plans that may cap benefits or not cover critical services.

Furthermore, President Trump’s recent Executive Order calls on federal regulators to revise rules to “expand the availability of short-term, limited duration plans.” This would add incentives for web-based broker sites to sell alternative products that don’t comply with the ACA and that could make many consumers and the marketplaces worse off. But even with the federal rule changes already in effect for “Proxy Direct Enrollment” and those that may come for short-term, limited duration plans, states have the authority and the tools to oversee their markets and ensure consumers receive protections at least as strong as those provided under the ACA.

State Options

In a recently published issue brief for the Robert Wood Johnson Foundation, CHIR experts mapped out state options for responding to federal rule changes, including those in effect for direct enrollment. State departments of insurance continue to be the primary entities overseeing insurers’ marketing tactics and the practices of agents and brokers. For example, to mitigate concerns raised by “Proxy Direct Enrollment,” state regulators can:

  • Require web-based broker sites to display all marketplace plans in an unbiased manner and regularly monitor the statements and plan displays on broker websites.
  • Require web-broker sites to provide notice to consumers of their rights, including the option to leave the site at any time to enroll through healthcare.gov, and require web-based brokers to disclose their commissions, so consumers are aware of financial incentives to sell particular plans and products.
  • Partner with other state agencies, such as the attorney general’s office, to ensure that web-based brokers have adequate safeguards in place to protect consumers’ sensitive personal and financial data.
  • Code consumer complaints to flag when a consumer was assisted by a web-based broker and monitor/investigate any that show a pattern of problems.
  • Conduct public education to help consumers understand their rights when applying for marketplace coverage through Proxy Direct Enrollment.

Proxy direct enrollment can be a beneficial pathway for consumers to determine their eligibility for marketplace subsidies and find a plan that works for them, particularly in the wake of declining resources for marketplace Navigators. However, if left unregulated, some web-based brokers could put consumers – and the marketplaces – at risk. States have an important role to play to ensure that these companies meet some basic consumer protection standards.

 

 

 

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