Do the ACA's state-based marketplaces have an auto re-enrollment problem?

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Enrollment should be active

It has been clear since plan offerings were posted for the ACA marketplace’s second Open Enrollment Period (OEP) in fall 2014 that “auto re-enrollment” can be dangerous for enrollees.

If marketplace enrollees take no action during OEP — declining to log on and update their income and other information relevant to subsidy eligibility and subsidy size, and review available plans — HealthCare.gov or the relevant state-based marketplace will auto-enroll them in their prior year plans, tapping the IRS and other data sources to update income and other personal information. If that plan is no longer offered, the marketplace will “crosswalk” the enrollee into the nearest equivalent, e.g., a plan by the same insurer in the same metal level. If the marketplace determines that the enrollee is no longer subsidy eligible, it will enroll her with no subsidy, exposing her to hundreds of dollars per month in premiums (one month, if she fails to pay any premium in the new plan year). Disenrollment occurs only if the person logs on and initiates it — or fails to pay the monthly premium when the new plan year begins.

Even when the enrollee’s income and family composition are essentially unchanged, remaining in last year’s plan (or a substitute into which one is crosswalked) without examining this year’s options can lead to major new expense. The plan’s premium may rise significantly. Worse, if another insurer (often a new entrant into the local market) undersells last year’s benchmark plan — the second cheapest plan, against which subsides are set — subsidies may shrink, hitting an enrollee who stays in a plan with a rising premium with a double whammy. The media was full of such stories in the fall of 2014. I told one myself, about a family of 3 in Philadelphia whose premium for a silver plan would have gone from $0 to $196 per month if a navigator hadn’t provided guidance.

The problem is not new, and it hasn’t gotten any better. In fact it’s gotten worse, as narrow-network HMO plans have become prevalent at the lowest price points, and cut-rate new entrants sometime render plans with more robust networks more expensive.. Another aspect of the problem is also not new, but when when it was brought to my attention this week it rather shocked me, and it may have major policy implications.

Longer Open Enrollment period in ACA marketplace provides a fail-safe for enrollment errors

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Health insurance broker Jenny Chumbley Hogue, based near Dallas, highlights one good thing about the longer Open Enrollment Period for the ACA marketplace enacted by the Biden administration (OE is now running through January 15 rather than December 15):

Thank goodness OEP extended to 1/15 so we can correct the issues. @charles_gaba @LouiseNorris @AlekaGurel @xpostfactoid @SheronESidbury

— Jenny Chumbley Hogue (@kgmom219) December 13, 2021

That is: Marketplace enrollees who passively let themselves be auto-re-enrolled for 2022 in their current plan, and get shocked in January by a sliding benchmark that raises their premiums (sometimes dramatically), can now choose a cheaper plan before January 15 and suffer only one month at the higher premium, rather than being locked in for twelve months.

At an income of $25,000 for a couple -- just under 150% FPL -- the benchmark (second cheapest) silver plan is free in 2021 and 2022, thanks to the subsidy boosts created by the American Rescue Plan Act, enacted in March 2021 (the ARPA Jenny Hogue refers to in the tweet). That is, at least two silver plans are free for any individual or family with an income up to 150% FPL. 

This year, the cheapest silver plan in Dallas was the Blue Cross plan shown below. But see what happens to a pair of 63 year-olds in Dallas who renew that plan in 2022:

Replacing the individual mandate with auto-enrollment, part II

A week ago, I suggested that the wide availability of free bronze plans in 2018 for subsidy-eligible potential ACA marketplace enrollees opens a window for replacing the individual mandate with auto-enrollment of the uninsured, a measure that's popped up in various Republican bills and conservative repeal-and-replace proposals.

That was tongue-in-cheek, since the House and Senate tax cut bills make it obvious that Republicans are not interested in using current federally budgeted dollars to insure more people. They'd rather give the subsidy money to the wealthy via tax cuts.

That said, a fact brought to my attention by Politico's Dan Diamond does boost the case for auto-enrollment. 80% of the 6.7 million households that paid the mandate penalty in 2016 (for tax year 2015) had incomes below $50,000 -- that is, near the subsidy eligibility threshold for a single person, $48,240. Many of those households with incomes over $50,000 are also doubtless subsidy eligible. (On the other hand, a good number of those with incomes in subsidy range may have been disqualified for subsidies by an offer of insurance from an employer. Kaiser estimates that 3.7 million are rendered subsidy-ineligible for this reason.)

IRS tables show that payers of the mandate penalty in tax year 2015 were pretty heavily concentrated at income levels where free bronze plans are common this year:

Hey, Republicans: Auto-enrollment is within reach

Put it in Chapter 1 of the Annals of Unintended (though not un-forecast) Consequences: Trump's cutoff of federal funds to reimburse health insurers for Cost Sharing Reduction (CSR) subsidies has made free bronze plans widely available to subsidized buyers in the ACA marketplace*.

So available, in fact, that the Kaiser Family Foundation has calculated that more than half of the 10.7 million people who are uninsured and eligible for marketplace coverage can find free bronze plans in the ACA marketplace, and 70% can access bronze plans for less than the cost of paying the penalty for going without coverage.

That paradoxical effect of cutting off funding for a subsidy suggests a political deal -- a second paradoxical effect.  Recall that ever since Democrats included the individual mandate in the various bills that became the ACA, Republicans have cast the mandate as a mortal threat to freedom -- and seek to this day to repeal (and maybe replace) it.

As a substitute for the mandate, several Republican bills and plan outlines included auto-enrollment of the uninsured in a catastrophic plan that would cost the enrollee nothing, since its premium would equal whatever subsidy the enrollee was eligible for.

Where are Pennsylvania's low-income 2014 private plan enrollees?

As I've noted before,  I've been been trying to determine what happened to Pennsylvania's apparently large number of  low-income 2014 private plan enrollees who became eligible for Medicaid when the state belatedly enacted the ACA Medicaid expansion, effective Jan. 1 2015. My working hypothesis has been that large numbers of them stayed auto-enrolled in QHPs -- or re-enrolled prior to the expansion kickoff in December. Detailed enrollment data released by HHS early this month calls that notion into question however.

Here was the original premise. Most of Pennsylvania's 2014 enrollees in private plans (so-called Qualified Health Plans, or QHPs) re-enrolled for 2015.  As of May 2014, Pennsylvania had 318,000 enrollees. As of the end of open enrollment in mid-Feburary 2015, 276,732 were re-enrolled, according to the breakout HHS published this month. A large percentage of those re-enrollees might now be Medicaid-eligible -- and so theoretically ineligible for private plan subsidies. I had originally estimated that about one third of QHP enrollees as of late 2014 -- perhaps 90,000 -- had incomes under 138% of the Federal Poverty Level (FPL), which would qualify them for Medicaid. Then I learned that by February, CMS had compiled a a list of 141,000 Pennsylvania households with at least one QHP enrollee determined to be Medicaid-eligible (CMS has confirmed this for me.)  If accurate, that's close to or more than half of PA's QHP enrollees as of late 2014 (Those households had some 175,000 members).

Moreover, for 2015 the state had 160,961 auto-enrollments - enrollees who took no action and so were automatically re-enrolled in their 2014 plan or a substitute provided by their insurer.  That suggests a large potential pool of people who may not have noted or chose to ignore their eligibility for what was originally Pennsylvania's "private option" Medicaid expansion, which was quite rocky at the outset.

Why am I now questioning this premise? The current income distribution of Pennsylvania's QHP enrollees, revealed in the data HHS published in early July, looks more like that of an expansion state than a nonexpansion state. As of of the end of open enrollment in mid-February 2015, 131,470 out of a total of 472,697 Pennsylvania QHP enrollees, or 28%, had incomes in the 100-150% FPL range.