Wisconsin’s Objection to Automatic Re-enrollment of Enrollees in Federally Facilitated Marketplaces

Last month, we posted a blog about states that have been hostile to the Affordable Care Act (ACA) but are now taking action to enforce federal rules, protect consumers, and stabilize their insurance markets. As we noted in the blog, implementation of the ACA is a slow and evolving process. One state that has been particularly slow to warm to the ACA is Wisconsin. It refused to create a state-based marketplace, signed onto constitutional challenges against the law, and declined to expand Medicaid beyond the poverty line.

In that same vein, the Wisconsin insurance department recently released a press statement opposing the process that the federally facilitated marketplace (or Healthcare.gov) will use to automatically re-enroll consumers whose insurers will no longer be offering plans next year.

What does this mean? With the news this past spring that UnitedHealthcare is pulling out of most of its ACA marketplaces, and other companies are exiting or reducing their service areas, the Obama administration proposed a policy to help prevent affected consumers from facing a gap in coverage. The administration’s proposal automatically re-enrolls consumers with a new company that offers a marketplace plan that is the most similar to the one in which they are currently enrolled. This automatic re-enrollment would only occur if their current insurer is leaving the market and the consumer doesn’t take any proactive steps to enroll in a new plan.

Wisconsin is opposing the administration’s proposal, saying that it violates “long standing State and Federal contract law principles,” and that Wisconsin consumers “have the right to enter into contracts of insurance free from external pressure and without pressure.” This argument falls flat. First, consumers will have plenty of opportunities to choose their own health plan throughout the process. When a company is exiting the market, both the marketplace and the insurer must send enrollees notices that their health plan is ending and that they will be automatically enrolled into a different plan unless they choose another health plan. In general, consumers have until December 15, 2016 to pick a new plan; otherwise, they are automatically enrolled into a health plan with an effective start date of January 1, 2017. Even after consumers are automatically enrolled, they have until the end of open enrollment (i.e., January 31) to pick another plan if they don’t like the one they are in.

Second, the argument that the administration’s process will cause “significant consumer harm” fails to acknowledge that the re-enrollment proposal is meant to protect the consumer’s financial assistance, as the premium tax credits and cost-sharing assistance are only available for those enrolled in a marketplace plan.

Last, the argument that automatically reenrolling a marketplace consumer is against “consumer choice” doesn’t make sense. The consumer has already chosen to be in a marketplace plan and if eligible, accept financial assistance. What the consumer didn’t choose was for an insurer to withdraw from the market so that his or her plan is no longer available. The administration’s automatic re-enrollment policy protects both consumer choice as consumers can change their plan at any time during open enrollment and consumer’s continuous access to coverage and financial assistance.

As CHIRblog readers know, the ACA builds on states’ traditional primary role in enforcing insurance market reforms, including operating the ACA-created marketplaces. When given the choice, Wisconsin declined to operate its own marketplace, thereby forfeiting its ability to shape policies governing the marketplace and instead has handed the reins over to the federal government. Unless and until state leaders decide to operate and govern their own marketplace, those federal rules will continue to apply to marketplace plans sold to Wisconsin residents.

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