The Affordable Care Act (ACA) established guaranteed issue of health insurance, prohibiting practices that deny coverage to people with pre-existing conditions. But to ensure that people don’t wait until they are sick to sign up, which gives healthy people the option to forgo coverage and creates an unbalanced risk pool, the ACA restricts enrollment to a defined “open enrollment” period each year (with some exceptions).
Last month, the Trump Administration proposed a rule that shortens the annual open enrollment period for plan year 2018, reducing the time frame to sign up for coverage from 90 days to 45 days. Instead of running from November 1st, 2017 to January 31st, 2018, as established by a previous rule, open enrollment for plan year 2018 would run from November 1st to December 15th, 2017.
Since 2015, the ACA’s open enrollment periods have lasted three months. In 2016, the Department of Health and Human Services (HHS) established that, while the upcoming open enrollment would again run 12 weeks, from November 1st, 2017 to January 31st, 2018, the time frame for signing up for 2019 coverage would shorten to just six weeks, starting November 1st, 2018. The new proposed rule bumps up that change, giving states less than a year to prepare for a significantly shorter open enrollment period.
Reducing the Open Enrollment Period: Policy Goals and Potential Impact
HHS argues that this provision of the proposed rule will help stabilize the individual market. Further, they note that the December 15th deadline lines up better with the signup period for Medicare and employer plans, and provides enrollees a full year of coverage. Most importantly for insurers, the shorter enrollment period prevents consumers from signing up at the end of January to avoid a full year or premiums. Additionally, cutting the enrollment period could reduce opportunistic signups from people who initially pass on coverage and then learn of new health care needs in late December or early January. HHS hopes that these effects will streamline the process for consumers and insurers, and improve the risk pool by reducing adverse selection.
On the other hand, consumer advocates and even some insurers have expressed concerns about the potential impact on enrollment numbers, particularly for the young and healthy. Research has shown that younger consumers wait until the last minute to enroll.
In the proposed rule, HHS says that it “intend[s] to conduct extensive outreach to ensure that all consumers are aware of this change and have the opportunity to enroll in coverage within the shorter time frame.” Based on recent findings that advertising efforts correlated with enrollment outcomes during the ACA’s first open enrollment, a comprehensive and well-funded consumer outreach and education campaign would be necessary to generate robust enrollment. However, in the wake of failed legislative efforts to repeal and replace the ACA, the Trump administration has promised to let the ACA marketplaces “explode,” suggesting that HHS’ intention may not be fulfilled.
Shorter Enrollment Period: Issues for States
Once the federal government sets the open enrollment period, state-based marketplaces have not had flexibility to change those dates. In response to the proposed rule, the National Association of Insurance Commissioners (NAIC) reiterated their recommendation to give states the power to set their own deadlines for the annual event.
In the proposed rule, HHS sought comment on the capacity of state-based marketplaces to administer the enrollment process in a shorter time frame, acknowledging the potential stress the rule would put on them. State-based marketplace officials largely opposed a shorter open enrollment period, arguing that by pushing up the new December 15th deadline to 2017, states will have only a number of months to plan and execute not only the enrollment process, but also crucial consumer education and outreach efforts. In past years, December 15th has been the deadline to sign up for January 1st coverage, and is usually one of the busiest enrollment days. Last year on December 15th, marketplaces had the largest enrollment volume in a single day since the ACA’s inception, causing the Centers for Medicare & Medicaid Services (CMS) to extend the deadline for enrolling in coverage starting January 1st. Setting the 15th as the open enrollment deadline could increase volume to a point that state personnel and enrollment systems lack capacity to handle.
This, in turn, could have significant implications for marketplace enrollment and the overall health of the risk pool. If consumers find the eligibility and enrollment process to be time consuming and onerous because of clogged websites or phone lines, they are less likely to complete enrollment. Those most likely to be deterred are the young and healthy, while those with high cost conditions will stick with the process because they need the insurance.
Therefore, for states that want to keep their markets stable, the shorter timeframe could require upgrades to their websites and increased investments in brokers, consumer assisters, and call centers. Both states with their own marketplaces and those operating via the federal marketplace may also need to provide additional support consumer education and outreach, particularly if the federal marketplace fails to invest in marketing or advertising.
If the rule is finalized as written, and states must comply with the shorter timeline, the next open enrollment could push state marketplaces to their limit, which may leave both consumers and insurers in the lurch.