Last week, due to massive problems with enrollment through the federal website, the Obama administration extended the deadline for signing up for coverage without facing a penalty to March 31, 2014, the end of the open-enrollment period. Reform supporters say that should leave plenty of time for Americans to sign up for coverage, assuming the federal website is fixed by December as recently promised by the administration.
The implications of delaying the mandate could be potentially serious for insurers offering products on the federally run and state-run exchanges, according to Joel Michaels, an attorney with McDermott Will & Emery who consults with insurers. Specifically, delaying the mandate could alter the mix of individuals seeking coverage through the exchanges, tilting the balance toward sicker, more expensive individuals who are highly motivated to obtain insurance. Already there are concerns that the financial penalty in the first year will not be significant enough to induce young, healthy individuals to sign up for coverage.
“If the healthy people don't have any financial incentive, if that is now deferred for an entire year, what will that do to the mix?” Michaels asked. “That is a significant concern.”
On the other hand, some experts note that the reinsurance, risk adjustment, and risk corridor provisions of the Patient Protection and Affordable Care Act should buffer insurers financially if they enroll a disproportionate share of sicker people.
But extending the open-enrollment period to March 31 could have implications for insurers. That's because soon after the March 31 enrollment deadline, they must begin setting their rates for health plans offered on the exchanges in 2015. If that period is extended, and they are dealing with incomplete information about who will enroll, that rate-setting process could be complicated.
The Obama administration has already made a modest adjustment to the open enrollment period. On Monday, the CMS issued guidance clarifying that individuals will not face a fine if they sign up for coverage anytime during the open enrollment period. Previously they could have been penalized if they didn't purchase coverage by Feb. 15.
But Thomas Miller, a healthcare analyst at the conservative American Enterprise Institute, observes that the administration will be loath to allow any significant changes to the healthcare overhaul. “Once you run this stuff out on the floor, you don't know what else you'll have to give ground on," he said.
Miller also points out that the political pressures for swing-state Democrats will only mount if problems persist with the federal website, which serve 36 states that chose not to set up their own exchange. If the problems drag on into 2014—a mid-term election year with a lame-duck president—political survival could trump Democratic solidarity on the healthcare bill.
“That's something the White House and the Democratic leadership would like to avoid," Miller said.
But that's still a ways into the future. Administration officials have vowed to have the site functioning effectively by the end of November. If they can make good on that promise, it still leaves four months before the open-enrollment period closes.
"They do have a good amount of time to fix the site," Michaels said.
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