Want a SEP? You'll have to schlep...CMS ends application streamlining on HealthCare.gov

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Update, 7/29/20: CMS confirms that it has reverted to the standard pre-crisis SEP verification process,  "as part of its efforts to safeguard taxpayer funds, promote market stability, and ensure affordable premiums."  As noted below, insurers were not calling for this change -- they are not concerned that looser SEP verification at this point will worsen the risk pool. As for safeguarding taxpayer funds, inhibiting marketplace enrollment will always do that. Meanwhile, HHS has been showering billions in CARES Act relief funds on the nation's wealthiest hospital systems, many of which hold huge reserves, while safety net hospitals go begging.

In late March, as twelve of the thirteen state-based ACA marketplaces opened emergency Special Enrollment Periods in which anyone who lacked health insurance could enroll, CMS was rumored to be on the brink of following suit in HealthCare.gov, the federal exchange used by 38 states.

Ordinarily, enrollment in ACA marketplace health plans is only open to all during an Open Enrollment season, which on HealthCare.gov runs from November 1 to December 15.  Those seeking coverage at other times must apply for a Special Enrollment Period and provide documentation showing that they had a qualifying life change, most often loss of health insurance. The emergency SEPs in some states did away with that requirement, functioning as in Open Enrollment. Others required mere attestation by phone or box-checking of loss of coverage or other life change, without documentation. (I reviewed various emergency SEP processes and presentations here.)

HHS ultimately declined to open an emergency SEP in HealthCare.gov. Reportedly the agency was ready to do so, but the Trump White House - killed it. Putting the marketplace forward as a vital service in time of intense need was a bridge too far for Trump & Co.  CMS did, however, accept attestation of loss of coverage prior to enrollment, with documentation to be supplied later. That change occurred around April 20.

Now, that limited but important accommodation has ended. Jenny Hogue, a health insurance broker based in Murphy, Texas, got wind of the change early this week. Shelli Quenga, director of programs at the South Carolina-based Palmetto Project, which provides marketplace enrollment assistance as a nonprofit brokerage, confirmed this to me, as did Jodi Ray, Director of the Florida Covering Kids and Families Project at the University of South Florida. "We have had appointments in the past week where consumers were asked for documentation to be uploaded," Ray emailed.

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Quenga had previously explained to me the extent to which SEP documentation requirements were likely to serve as a barrier to coverage during an abrupt economic meltdown:

"The process is deliberately cumbersome, and it's going to cause people to remain without coverage"...

First, you need a date  when your coverage ended, and that in itself can be difficult to obtain. Once you have entered that information, the marketplace gives you thirty days to provide documentation -- a letter from your employer or the insurance carrier stating the coverage termination date. A letter offering COBRA, the extension of job-based insurance for which the ex-employee must pay full price, will also serve.  If documentation isn't provided within 30 days, you have to start the application process over again. And you have only a 60-day window from date of coverage loss to be granted a SEP....

All these difficulties are likely to be cubed in the coming tsunami of job loss and loss of insurance. Start with verifying the date that coverage was lost.  It can't be merely inferred. "People lose coverage in the middle of the month, at the end of the month, or at some random date," Quenga says.

Imagining current predicaments, Quenga posits, "You can't just go into your place of business and talk to them because the business is closed. "Your own supervisor may have been laid off. So who are you supposed to talk to?" 

Health insurance professionals I spoke to said that their companies were not pushing for tightening SEP attestation. Most insurers supported the idea of an emergency SEP back in March and April.

The ACA marketplace could have been boosted as a major source of health insurance during a pandemic as tens of millions of Americans lost their jobs. An emergency SEP could have been established nationwide. Advertising and enrollment assistance, previously gutted by CMS in HealthCare.gov states, could have been boosted. Subsidies could have been increased on an emergency basis.

Instead, Congress joined the administration in weakening the marketplace by neglecting to exempt the $600/week extra unemployment insurance from inclusion in applicants' Modified Adjusted Gross Income (MAGI), which determines subsidy size. (The extra UI was exempted from consideration for Medicaid eligibility.) For many applicants, the extra reported income will likely wipe out the Cost Sharing Reduction (CSR) subsidies that make ACA coverage far more comprehensive at incomes up to 200% of the Federal Poverty Level than at incomes above that threshold. Any substantial income boost means paying more -- for less coverage if CSR is lost or weakened -- in a market in which many subsidy-eligible prospective enrollees find coverage unaffordable.

While the Urban Institute and the Kaiser Family Foundation have estimated that about 25-30% of those who lose job-based health insurance will qualify for marketplace subsidies, the percentage who enroll in the marketplace will probably be lower. In ordinary times, only about half of those who qualify for subsidized marketplace coverage enroll. Add in a UI income boost as high as $10,200 (or more if the boost is extended in some form) and the marketplace's role in pandemic relief is further marginalized.

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