The Biden administration's proposal to give consumers more time to enroll in the Affordable Care Act's health insurance exchanges will lead to more low-income people gaining coverage, but analysts are uncertain whether that would encourage more insurers to offer policies on the marketplaces.
On Monday, CMS unveiled a plan to give exchange customers an additional 30 days to enroll, extending the enrollment period from Nov. 1 to Jan. 15; currently, signups end on Dec. 15 each year. The agency also plans to establish a monthly special enrollment period to allow people with low incomes more opportunities to enroll in a premium-free silver plan.
"That's a big deal," said Sabrina Corlette, a research professor at the Center for Health Insurance Reforms at Georgetown University. "For most people, you need a special event in your life to qualify to enroll outside of open enrollment, so if you have a baby or lose your job. But here, what they're proposing is that anybody who is under 150% of the federal poverty line would get a longer opportunity to enroll in a marketplace plan." That would be $19,320 for a single person and $39,750 four a family of four.
Working-age Hispanic people, who comprise the lion's share of low-income individuals without insurance, would benefit most, Corlette said.
Offering more opportunities for low-income people to seek health coverage also could lead to higher Medicaid enrollment, she said. About 30% of visitors to HealthCare.gov learn they qualify for Medicaid benefits, which are more comprehensive than bronze and silver marketplace plans and typically don't require premium payments. Once the public health emergency ends and states ramp up delayed Medicaid redeterminations, ensuring access to the exchanges will be critical for the millions of Americans who are no longer covered by Medicaid, Corlette said.
"We could be talking millions of people," Corlette said. "To the extent that the marketplace is able to lower any and all barriers to those folks, I think is generally a good thing."
While increasing access to the exchanges for low-income Americans likely will boost enrollment, extending the time to sign-up for everyone else will not drive enrollment a significant amount, Corlette said. But it will provide more choice to individuals who are automatically re-enrolled in their plans without realizing their premiums have increased. With the current Dec. 15 cut-off date, consumers are often caught off guard by the time they get the first bill for their health insurance in January, and left wishing they had shopped around for cheaper coverage, she said.
The proposed rule would also reinstate requirements that ensure ACA navigators educate consumers and assist them with some post-enrollment topics, including the eligibility appeals process and how to use their coverage.
"Those folks get this, 'Oh, my God, my premiums just went up by 50%' and they can't come back to HealthCare.gov and switch plans," Corlette said. "The biggest thing that this extension provides is an opportunity for people in that situation to come back and update their account and get the best deal possible with the subsidy that they're eligible for."
This is particularly relevant as Congress continues to offer enhanced subsidies for the ACA through the American Rescue Plan Act. One-third of the 1.2 million people who have signed up for ACA plans since Feb. 15 during the COVID-19 special enrollment period are paying less than $10 per month in premiums, according to the HHS data released in June.
The proposed rule arrives as interest in the exchanges has grown for commercial and not-for-profit insurers. In 2021, just 10% of U.S. counties had a single insurer offering, down from 25% the year before, according to the Kaiser Family Foundation.
By 2025, Cigna plans to double its geographic coverage on the individual market to 20 states. Aetna also recently announced plans to re-enter the exchange in 2022, after joining other prominent insurers in 2018 to say they couldn't manage the rising costs associated with sicker patients signing up for coverage. A federal judge alleged at the time that Aetna exited the exchanges in the hope that it could finalize its ultimately failed merger with Humana. UnitedHealth Group is expanding its footprint, too.
AHIP, the largest health insurance lobbying organization, did not respond to an interview request about how the proposed rule would impact commercial insurers' business.
But health insurers benefitted from the special enrollment period. At the end of its first quarter, Centene Corp. said it has added 320,000 new ACA members since February. Molina Healthcare said its Obamacare membership rose 88% year-over-year to 620,000 at the end of its first quarter. During an earnings call with investors, Molina CEO Joe Zubretsky credited the extended enrollment period with driving sign-ups but worried about the health of new members.
"Anytime we take on new members, by its very nature, you don't yet understand the acuity of that population," Zubretsky said.
Health insurers previously opposed lengthening the enrollment period based on concerns that it could encourage people to wait until they're sick before signing up for a plan, leading to adverse selection, said Myra Simon, a principal at the consultancy Avalere Health.
There's no evidence yet that states with lengthier enrollment periods experience adverse selection and a worse risk mix than states that use the federal deadline, Simon said. But if the Biden administration's plan takes effect and leads to an influx of relatively sicker customers, it would lead to premium hikes for all of their policyholders, she said. The eventual end of the enhanced subsidies could make that outcome more likely as healthier consumers exit the market because the prices are too high without the additional federal assistance.
"More enrollment is good when it's broadly representative of the community. When it is selectively representative of the highest cost patients, then that drives premiums up for everybody in that market," Simon said. "The American Rescue Plan's premium subsidies offset some of these fears about adverse selection, but those are temporary. Adverse selection is really only a threat once the subsidies are gone."
