But there are concerns that consumers may belatedly find out that the federal premium subsidy they received was either too high or too low. If it was too high, they will have to refund the overpayment to the Internal Revenue Service. If it was too low, they would have paid too much out of pocket for the premium, though they can apply for an adjustment at the end of the year.
The proposed rule reduces the potential for mass confusion about re-enrollments just ahead of the November congressional elections, as well as the potential for people inadvertently dropping coverage and causing a big increase in the uninsured rate. Many consumers who are new to the individual insurance market may not realize they have to re-enroll. Consumers will receive notifications from HHS about their 2015 options in the weeks before heading to the polls. It is expected to reduce the strain on the HealthCare.gov federal enrollment website.
"They're trying to reduce disruptions in the marketplace by basically allowing people to do nothing and stay insured," said Caroline Pearson, a vice president at the consulting and research firm Avalere Health. "That avoids having people inadvertently fall out of coverage."
The proposal is welcome news for enrollment outreach workers, who are prohibited by federal law from maintaining data on individuals that they help enroll in coverage. That means they have no means of reaching back out to those individuals to make sure they have signed up for 2015 coverage. Automatic re-enrollments will eliminate the headache of trying to figure out a way to communicate to those individuals about their coverage options going forward. In addition, it will reduce the burden on healthcare providers in getting their low-income and uninsured patients to sign up.
Congressional Republicans were muted in their response to the proposed rule. Medicare Advantage has a similar system of automatic re-enrollment, where beneficiaries who take no action during the annual open enrollment simply remain in their current Advantage plan. That's generally also true for workers in employer health benefit plans.
In addition, the concept of automatic enrollment has some bipartisan support. Some Republicans have proposed auto-enrollment, with an opportunity to opt out, for employees in company health benefit plans as a way to increase coverage without a mandate.
But automatic re-enrollment raises the possibility that some consumers will see their premiums increase significantly if they don't take the initiative to switch plans. 2015 rate filings so far around the country show insurers raising their rates at sharply different levels, with some even cutting rates.
In addition, the amount of the federal premium subsidy available to individuals with incomes up to 400% of the federal poverty level is likely to change based on changes in the premiums of the benchmark health plans. The amount of the premium tax credit is tied to the cost of the second–lowest-cost silver plan in each market. As plan premiums change, so will the subsidy. Consumers who are automatically re-enrolled may find their subsidy has decreased and their premium contribution has increased, in which case they might do better shopping for a cheaper plan.
A study released by Avalere on Thursday found that in six of nine states analyzed, the 2014 benchmark silver plan will change in 2015 under premiums proposed by insurers.
Pearson said that there will need to be efforts to educate consumers about these changes so that they don't experience sticker shock when they get their first premium bills for 2015. "You know that people aren't apt to re-shop," she said. "So you need to educate them and encourage them to do so if they want to be price sensitive."
America's Health Insurance Plans, the main industry group, was cautious in its response to the proposed rule. "While we're still reviewing the details, we appreciate that HHS is taking steps toward simplicity and stability for consumers," the trade group said in a written statement.
One ramification of automatic re-enrollments is that the process is likely to result in more individuals receiving subsidies they aren't eligible for, said Joe Antos, a healthcare policy expert at the conservative American Enterprise Institute. That could lead to a messy process where individuals file their taxes and find out that they owe money because their subsidy was too generous. "This will be a catch-up game from the very beginning," Antos said "There's really no question that the IRS has a problem there."
Tim Jost, a Washington and Lee University law professor and healthcare reform expert who supports the law, shares concerns about the federal government's ability to handle the administrative and technological burden—especially given the troubled rollout of the exchanges last year. "They should have learned a lot in the last year," Jost said. "I'm praying that they'll be up to the task but it's going to be a monumental job."
A conservative analyst criticized the automatic re-enrollment proposal. “What would have surprised me is if they had respected individual freedom,” said Dean Clancy, a former senior White House health policy official in President George W. Bush's administration.