Healthcare.gov will automatically renew people in their plans. There is a set of rules that determines how the auto-renewal works. The the summer 2017 slides are clear on the implementation. These rules have three key assumptions.
- Minimize disruption
- The pricing order (all else being equal) will be Bronze, Silver, Gold, Platinum.
- Premiums are more important than out of pocket costs.
- Implicit assumption is that auto-enrollers are healthier/cheaper than active buyers
All of these assumptions are defensible assumptions. They are very reasonable assumptions in any other year but 2018.
The federal hierarchy works like this:
|Federal Auto-Enroll Logic
|Same Plan ID
|Same Plan Type, Network and Metal Level
|Same Plan Type and metal level, similar network
|Same Plan Type and network, drop one metal level
|Same Plan Type, drop one metal level
|Same Plan Type and network, increase one metal level
|Same Plan Type, increase one metal level
|Same Plan Type and network, any metal level
However 2018 is strange. States are facing Cost Sharing Reduction (CSR) uncertainty and they are making difference choices on how to load CSR subsidy uncertainty into rates. Now these rules will put people who are auto-enrolled on the last day of open enrollment into potentially dominated plans. A dominated plan is one where on the relevant characteristics there is at least one other plan that has lower premiums and lower out of pocket expenses. Dominated plans should not have any membership in them in an ideal world.
In states that assume that CSR will be paid or states that tell their insurers to load CSR into all plans at all metal levels, this hierarchy will not put more people into dominated plans. However that is the case in all states.
Some states are telling their insurers to put the CSR costs into their Silver rates. They are doing this in a couple of different ways. But both methods insurers use to load CSR costs only onto Silver means the pricing order becomes Bronze, Gold, Silver, Platinum. Anyone who makes more than 200% Federal Poverty Line and is auto-renewed into a Silver plan is guaranteed to be placed in a dominated plan. Gold plans offered by the same insurer in the same network will have lower out of pocket expenses and lower premiums.
Active shopping and active messaging is needed in states that are telling their insurers to load all CSR uncertainty costs into only Silver plans. Otherwise we are going to have massive selection of dominated plans when auto-renewals are completed.