New CMS rules could discourage 'young invincibles' from exchange

The Trump administration is requiring people who sign up for insurance on the federal marketplace during special enrollment periods to submit proof they are eligible, potentially making it less attractive to young, healthy consumers.

Starting June 23, people who lose coverage because they lose or switch jobs or move will need to have proof of their circumstances verified by the CMS before coverage can begin.

In August, those who are newly married, gaining a dependent or who have been denied for Medicaid or CHIP coverage also must provide documentation.

The goal is to prevent fraud on the exchanges and improve the individual market risk pool, according to the administration. The multiphased pilot was first referenced in a market stabilization rule released earlier this year, but the CMS just now released details to marketplace navigators and brokers.

Insurers have bemoaned the additional risk that special enrollment periods can introduce, as consumers often wait to gain coverage until they have serious and costly medical issues. Some consumers run up expensive medical bills and then drop their coverage.

Last year, the Blue Cross and Blue Shield Association released an analysis that revealed consumers who join during special enrollment periods use 55% more in medical services than those who gain coverage during the standard open enrollment period.

Stan Dorn, senior fellow at the Urban Institute Health Policy Center, believes the new CMS practice will result in fewer special period enrollments, which can potentially mean fewer losses for plans and maybe even convince some to continue to sell on the marketplace.

Others worry tightening eligibility will further harm the federal marketplace. Studies show that young and healthy people are less willing to go through the hoops of providing documentation for coverage than older individuals dealing with an illness, according to Sandy Ahn, a research professor at Georgetown's Health Policy Institute.

"Young people are likely not going to finish going through the process," Ahn said. That could be detrimental to the exchanges because it would leave mostly older, less healthy people in the risk pool.

Another concern is that the pilot gives consumers specific deadlines to submit documentation, but does not impose the requirements on the employers or insurance companies that would provide the documents needed, according to Elizabeth Hagan, senior policy analyst with advocacy organization Families USA. The CMS also has given a timeline for certifying documents.

Others say it's unclear what problem the administration is trying to solve. Despite insurers reporting losses incurred by consumers who sign up during special enrollment periods, there isn't wide evidence of fraud, according to Matthew Fiedler, a fellow with the Brookings Institution's Center for Health Policy.