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 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. The rule is also 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 Avalere Health. “That avoids having people inadvertently fall out of coverage.”
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 period simply remain in their current Advantage plan. That's generally also true for workers in employer health-benefit plans.
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. Rate filings for 2015 so far around the country show insurers raising their rates at sharply different levels, with some cutting rates.
In addition, the amount of the federal premium subsidy for people with incomes up to 400% of the federal poverty level is likely to change based on changes in the premiums of benchmark health plans. The tax credit amount is tied to the cost of the second-lowest-cost silver plan in each market. As premiums change, so will the subsidy. Consumers who are automatically re-enrolled may find their subsidy has decreased, in which case they might do better shopping for a cheaper plan.
Pearson said consumers must be educated about these changes so they don't experience sticker shock when they get their first premium bills for 2015. “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.”
Pearson said consumers must be educated about these changes so they don't experience sticker shock when they get their first premium bills for 2015. “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.”
A further ramification of automatic re-enrollment is that more individuals will receive subsidies they aren't eligible for, said Joe Antos, a healthcare expert at the conservative American Enterprise Institute. “This will be a catch-up game from the very beginning,” he 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 government's ability to handle the administrative and technological burden. “I'm praying that they'll be up to the task, but it's going to be a monumental job,” he said.
A conservative analyst criticized what he saw as the coercive aspect of automatic re-enrollment.
“What would have surprised me is if they had respected individual freedom,” said Dean Clancy, a former senior White House health policy official who worked in the George W. Bush administration.
Follow Paul Demko on Twitter: @MHPDemko
