A New Jersey Congresswoman is proposing to make pregnancy an open enrollment event where people can either switch insurance or go on the Exchange and get insured outside of the normal open enrollment period. I think covering pregnancy, pre-natal care, and post-partum care is an important policy objective but using the open enrollment system is not an optimal way of doing so.
We can start with a simple, commonsense improvement: making sure that mothers are given every opportunity to offer their babies a healthy start. That means offering women the opportunity to sign up for health insurance the moment that they find out they’re pregnant, getting the prenatal care they need.
Right now, events like the birth or adoption of a child, marriage, divorce, or even moving to a new state all trigger a special, 60-day window allowing individuals to enroll in a new health insurance plan. Yet pregnancy, one of the most life altering events anyone can experience, isn’t included on that list.
Special Enrollment Periods/qualifying events for people who have already identified that they are high cost individuals is a tough thing to square in a risk based insurance model. The better approach is to make Medicaid the payer of second resort for all pregnancy care while paying Medicare rates for those services.
Why is this?
Pregnancies are expensive. Non-complicated full term vaginal births can cost an insurance company $9,000 to $12,000 on average. When a company gets most of its membership for a year by January 1st, its actuaries can make a very good bet that the total pregnancy expense will be X dollars per member per month plus or minus a little bit. I pay into the pregnancy pool just as the 25 year old woman pays into the prostate exam pool.
However if there is a special open enrollment period, the actuaries have two calculations to perform. The first is to calculate the expense of pregnancy of currently enrolled members (this is a slightly smaller pool of people as some women only got insurance for maternity care) plus the expense of newly pregnant women. The actuaries have no clue how many women will choose a plan mid-year nor how expensive their claims will be. Actuaries and pricing experts are risk averse, so they’ll charge high costs to cover variance.
Now the MBAs at the top of the company and in utilization management won’t want to pay for variance, so they’ll engage in a race to the bottom for the attractiveness of their policies for pregnant or potentially pregnant women. This is similar to the Gresham Law race for AIDS medication:
Plans want to be as attractive as possible to healthy people and as unattractive to known sick people. This incentive structure creates an adverse selection mechanism collective action problem…. Once one plan in a market decides to make themselves as unattractive as possible, every other plan has to either follow suit in making themselves unattractive or be willing to take on massive health costs as they become the preferred plan for HIV positive individuals. At that point, there is a local death spiral as the attractive plan has to raise premiums to cover costs which drives them away from the Second Silver subsidy determination point, which then drives away cost sensitive but fairly healthy individuals from the plan. So a region will see either the “nice” plan become a “nasty” plan as a self-defense measure or that “nice” plan will leave the market so the new baseline is “nasty”. It is Gresham’s law for health insurance.
In my local market, there is a high end Ob/Gyn specialty hospital that handles a plurality of births in the region, and the vast majority of the odd/high risk cases. That hospital is in all but one insurers’ narrow network Exchange plans this year.
If pregnancy is a special qualifying event where people can get on Exchange insurance mid-year without paying into the pool for the first several months, the incentive is for every Exchange policy to drop the high end Ob/Gyn hospital from their networks. People want to go there, and they will select the plan that allows them to go to the high end specialty hospital over a plan that sends them to the community hospital for their Ob/Gyn services. Any insurer who keeps that hospital in network would have a massively disproportionate number of pregnancies, an even more disproportionate number of high risk/high cost pregnancies without the associated premium revenue coming in to cover those costs.
This could be kludged. One kludged that could work would be for open enrollment to occur for pregnancies but a modification of risk adjustment where every insurer gets a large “bump” flat fee payment for each open enrollment pregnancy. The money would come out of the risk adjustment budget. This would require an act of Congress, which means this is unlikely.
The more straightforward way of handling this problem is to expand state level Medicaid eligibility so that pregnancy is a qualifying event without regard to income level. The states that engage in fee for service would just pay for the services and get reimbursed from the Feds for their typical share, while states with Managed Care would pay pass-through bump payments to their local insurers. That structure is already established and it would require at most CMS waivers rather than new legislation. Adding this to a Super-Wyden Waiver would be a logical spot to start for now.
Alabama Blue Dot
I understand the public health need for pregnant women to receive care. However, shouldn’t they already have been enrolled? The whole rationale of the ACA was that everyone enrolls in insurance. The only circumstance I can see where someone should newly enroll when getting pregnant would be if they were covered under parent’s policy. I assume they would have to obtain insurance for at least childbirth and of course the child. Otherwise, allowing pregnancy to trigger enrollment seems like it’s undercutting the ACA’s premise.
Richard Mayhew
@Alabama Blue Dot: theoretically everyone should be enrolled, practically that is not the case
Mnemosyne (tablet)
I can see your rationale for why expanding Medicaid is the most logical solution, but what about women in asshole states that didn’t expand Medicaid? How do you force them to go along with the expansion? I suspect part of the congresswoman’s rationale for going the open enrollment route is a workaround for women who live in the asshole states.
JPL
@Richard Mayhew: It’s unfortunate that one decides to forgo the sign up.
If they make an exception for pregnancy, why not make exceptions for other life’s event. Someone might not plan on getting cancer but they did.
JPL
@Mnemosyne (tablet): GA medicaid rules are pretty limited unless you are pregnant. I’m not sure about the other southern states though.
Feathers
@Mnemosyne (tablet):
Pregnancy as auto-qualification for Medicaid would be both excellent policy and delicious trolling of the Medicaid hating states.
Richard Mayhew
@Mnemosyne (tablet): not ACA Medicaid, legacy Medicaid with waiver as pregnant women are a legacy covered population. Still might have Mississippi holding out, but higher probability of success than a technocratic Obamacare fix getting through Congress without poison pills
Brachiator
@Richard Mayhew: I can see your point, here. But why not allow a person who has insurance to switch insurance based on pregnancy?
Also, it is somewhat odd that you can get or switch insurance on the birth of a child, but not on becoming pregnant. I can try to guess at the logic of this and some differences between treating a pregnant woman vs treating a newborn as a separate person.
It is not unreasonable that a person might pay the penalty and not have insurance, but see a rational need when becoming pregnant. There should be numerous methods available to accommodate this without causing problems for either the insurers or the insured.
FlipYrWhig
What about kludging SCHIP to include prenatal care?
Steve in the ATL
Tough call. You definitely want women to have medical care for the whole process, but you also don’t want to encourage behavior like that pendejo in South Carolina who hated Obamacare until he started going blind.
Fred Fnord
Wait: a technical risk-adjustment is unlikely because of Republicans, but giving Medicaid benefits — at Medicare rates, mind you — to people who make too much to qualify for them, and elected not to buy insurance, in ANY state, is likely? I doubt even a liberal state would buy that, because it ‘sounds’ unfair, and lord knows we can’t do anything that sounds unfair even if it is great public policy.
Let alone people who were exempted from the insurance requirement due to lack of Medicaid expansion in Republican-controlled states!
I sometimes wonder at your definitions of ‘politically feasible’.
Xantar
OT: Great news, everyone. If you coordinate your payment systems together and move away from fee-for-service, you can save $100 million in Medicare payouts. Maryland did it.
Richard Mayhew
@Fred Fnord: the Medicaid idea requires fewer veto points and far more favorable holders of those veto points than legislation
Kylroy
@JPL: Exceptions like that would fundamentally break the system. Insurance relies on money coming from many healthy people to cover the bills of much fewer unhealthy people; if the healthy people can wait until they’re unhealthy to start paying in, there’s not enough to pay for the remaining sick people’s bills and the whole enterprise collapses.
catclub
@FlipYrWhig:
You would think that all the people who worry about murder of the pre-born would agree with this. But it probably would involve real money, and their compassion already ends at birth, anyway.
JPL
@Kylroy: That’s what I think, also. I should have added that.
Eric U.
@catclub: the people that think that abortion is murder also think that pregnancy is a great way to punish sluts. And sick babies are even better punishment. So I don’t think that there is much hope for improvement as long as they control a significant part of our government.
catclub
@Fred Fnord:
Ain’t that the truth. The bailout of the banks in 2008-2009 was because people could not pay on mortgages. But it was IMPOSSIBLE to give money to the people who could not pay their mortgages. Because that would be unfair to people who could pay their mortgages. never mind that fixing the system that way is better than getting 10% unemployment. Never mind that everyone benefits from the better economy. Instead that trader becomes the initiator of tea party resentment party.
raven
@Steve in the ATL: Hey, I mentioned you to your old law prof the other morning. He got a kick out of it!
Steve in the ATL
@raven: That’s funny!
boatboy_srq
@Alabama Blue Dot: @Richard Mayhew: “Enrollment” in “insurance” isn’t even the half of the story here. Case in point: a neighbor is expecting – and checking her own insurance ($12K in deductible expenses) and her husband’s ($15K in deductible expenses), while both offer “coverage” and the costs no doubt reduced measurably the cost of the care is still exceedingly high. (And yes I’m in one of those Mauve States that is trying to enact Medicare expansion despite major heel-dragging/tantrum-throwing by the Reichwing). Her provider has actually suggested that she forego insurance and obtain care as “self-insured” as the state cap on such is $3K, which while still a nasty bill is significantly lower than either policy’s coverage.
ETA: I’m fully aware that this particular couple signed up for wholly inadequate coverage in the first place. So are they. The pregnancy wasn’t planned and they’re dealing with that choice. The baby is due in (maybe) December, so it’s possible that there’ll be an opportunity to revisit their coverage in time to get worthwhile insurance without courting fiscal disaster.
Tommy
It would seem to me if you wanted to upgrade your coverage you should be able to. Maybe I am missing something but during the enrollment period I upgraded. No health issues I was just able to afford it. Outside of the open enrollment I can’t see why somebody can’t upgrade.
Richard Mayhew
@boatboy_srq: Something seems odd in the numbers, as ACA allowable maximum out of pocket for an individual is either $6,500 or $6,600 (I don’t have the numbers in front of me). So unless they have a grandfathered or grandmothered plan, something is not adding up right.
Tommy
@Richard Mayhew: That is spot on. The first year I bought a bare bones plan and that was the out of pocket. I am blessed with good health and what I went with. But I upgraded my plan last year because I am getting near 50 and figured if stats hold I might run into a few health issues. I didn’t want to have to pay that.
dr. luba
@Richard Mayhew: Is that true for employer provided insurance policies, too, or just for those bought through the marketplace?
shawn
@Tommy: because you are paying for a certain level of coverage – its not fair to just upgrade the coverage without having paid for it all of the sudden when you need it – i pay liability on my used Honda – I can’t upgrade to full coverage on the day of a wreck (i am seriously nervous about typing this and tempting fate on the ride home :P) because I now need the money to fix it.
Richard $6500 is the max
shawn
correction, i cant upgrade after i had the wreck – i could upgrade before the wreck and have coverage that day i suppose