At JAMA-Internal Medicine, Dr. Coleman Drake of Pitt and I have published a research letter**.
We were curious about the importance of auto-renewals for the ACA individual market. An auto-renewal happens when, at the end of the plan year, a person who did not make a choice to re-enroll in the same or a different plan for the next year is placed into a plan. This is fairly common. Healthcare.gov has their own hierarchy that prioritizes putting people in the same insurer and metal level. Covered California now has a similar set of rules, but for several years, they had a quirk. California would not auto-re-enroll folks whose insurers left the market. We took advantage of the quirk to find an answer for this question.
The short version is that auto-renewals are really critical for enrollment.
The longer version is that people who can auto-renew will show up in the next year’s enrollment file slightly more than half the time. People who can’t auto-renew will show up in next year’s enrollment file about a fifth of the time. It is a 30 percentage point difference even after we controlled for household and market characteristics.
This is a big deal.
Last January, the Department of Health and Human Services (HHS), published the draft Notice for Benefit and Payment Parameters-2020 (NBPP-2020) which is the ACA Exchange rulebook. It is published every year. There were two areas that HHS asked for advisory comments for action that would not occur until the 2021 plan year. The first was silverloading of Cost Sharing Reduction subsidies. The second was how to manage and prioritize the choices made in auto-renewals.
The practice of automatic re enrollment in the Exchanges gives rise to several concerns. Some consumers who are automatically re-enrolled in their current plan may be shielded from changes to their coverage, which may result in consumers being less aware of their options from year to year. There is a concern that automatic re-enrollment eliminates an opportunity for consumers to update their coverage and premium tax credit eligibility as their personal circumstances change, potentially leading to eligibility errors, tax credit miscalculations, unrecoverable federal spending on the credits, and general consumer confusion.
We seek comment on the automatic re-enrollment processes and capabilities as well as additional policies or program measures that would reduce eligibility errors and potential government misspending for potential action in future rule making applicable not sooner than plan year 2021.
Any automatic re-enrollment program is a matter of choice of priority. Not allowing automatic re-enrollment is a choice to optimize on more aware buyers making active choices at the trade-off of far fewer people being covered. The current Healthcare.gov rule set chooses to minimize disruption of coverage at a particular insurer while attempting to maximize enrollment. This choice comes at a trade-off of less than optimal choices as post-subsidy premiums are likely to bounce year over year and people will face January premium shock when a zero premium plan suddenly becomes a $100 per month plan due to changes in the premium spread of their auto-renewed plan, the old benchmark and the new benchmark. Other auto-renewal schemes are possible. Each of them will have their own trade-offs.
Our new research letter highlights that any scheme that forces people to make annual choices will lead to significant attrition and surprise coverage drops. Our research confirms CMS estimates with a different methodology and a different data set. Erecting administrative barriers will lead to significant enrollment losses.
** Drake C, Anderson DM. Association Between Having an Automatic Reenrollment Option and Reenrollment in the Health Insurance Marketplaces. JAMA Intern Med. Published online September 23, 2019. doi:10.1001/jamainternmed.2019.3717
jl
Thanks for links and interesting post. If I understand the results correctly even with automatic re-enrollment, the rate of churn is way too high for an efficient system.
David Anderson
@jl: Even with auto-enrollment, the overall rates of churn are high. Other (non-published at this time) evidence for certain subgroups have markedly different churn rates.
jl
@David Anderson: “evidence for certain subgroups have markedly different churn rates.”
Hope you can put up a post with that data soon. Only subgroup you’ve posted on so far is pregnant women who, IIRC, have even higher churn rates, so discouraging. Though, I understand that the individual market is a relatively small segment, around 10 percent, I think. But, discouraging
‘
David Anderson
@jl: That paper is one I did a friendly pre-submission read and had no involvement with. Given where the authors are submitting to and the typical turnaround time for that subfield, I’m hoping to be able to write about it by this time next year.
Michael Allen
Doesn’t normal insurance just keep going if you don’t do anything? That’s how my Aetna HMO worked when it was my federal employee option and how my current Medicare Advantage program works. In both cases I thought I could probably do better with another plan but after figuring out providers in their pools including a dentist who was in their partial dental plans, and figuring out how their system works, I haven’t changed to another one. The devil you know.
I’m guessing this is typical, although possibly with ACA plans being fairly new and rates etc. changing more often maybe more people would be looking into a change every fall. Also ACA plans have those different levels so there’s really more kinds of options.
rikyrah
OT:
Mayhew, did you see this and post on it already?
bloomberg.com/news/features/2019-09-17/under-trump-health-insurance-with-less-coverage-floods-market
Health Insurance That Doesn’t Cover the Bills Has Flooded the Market Under Trump
The administration’s moves to weaken the Affordable Care Act have taken hold, and companies are cashing in
By Zeke Faux, Polly Mosendz, and John Tozzi
Early one Friday morning two years ago, David Diaz woke up his wife, Marisia, and told her he didn’t feel right. He asked her to pray with him. Their son called 911, and within minutes, Marisia was tailing an ambulance down the dirt road away from the couple’s house on the outskirts of Phoenix to a hospital in the city. David had had a massive heart attack.
Before being wheeled into surgery, he whispered the PIN for his bank card to Marisia, just in case. But the double-bypass operation was successful, and two weeks later he was discharged.
On her way out, Marisia gave the billing clerk David’s health insurance card. It looked like any other, listing a copay of $30 for doctor visits and $50 for “wellness.” She’d bought the plan a year earlier from a company called Health Insurance Innovations Inc., with the understanding that it would be comprehensive. She hadn’t noticed a phrase near the top of the card, though: “Short-Term Medical Insurance.”
The Diazes’ plan was nothing like the ones consumers have come to expect under the 2010 Affordable Care Act, which bars insurers from capping coverage, canceling it retroactively, or turning away people with preexisting conditions. But the law includes an exemption for short-term plans that serve as a stopgap for people between jobs. The Trump administration, thwarted in its attempts to overturn the ACA, has widened that loophole by stretching the definition of “short-term” from three months to a year, with the option of renewing for as long as three years.
Damien
@rikyrah: Fuck these people. I hope every one of them are fed through the healthcare meat grinder and get left penniless in the gutter.
I have had my insurance canceled because TWICE I was told that I was set up for autopay, but was not. My premium was $30/mo. I don’t track my cash that closely, and they retroactively canceled it to May. This all happened juuuuuust before my diabetes flew out of control and I ended up in the hospital with DKA. Bye bye house down payment.
So you know what? Fuck it, I vote we just burn down the whole goddamn system, shit on the ashes and then tar insurance executives with it.
David Anderson
@Michael Allen: I will expand on this tomorrow or Wednesday.
jl
@David Anderson: I’m looking forward to your post on that topic.
In my view, the robot’s breakfast of many plans, the resulting, and often scaammy, pricing, options designed to segment the market, and network gaming, and the resulting high churn is just a horrifying slow motion train wreck demonstrating the instability of insurance markets with heterogeneous risks and probably lack of equilibrium unless market is concentrated enough to rake in massive excess profits (cough cough rothschildstigltz….)
jl
@rikyrah: Sad and infuriating story. As Paul Krugman noted recently, the only business that thrives under Trumponomics is the scam business.
low-tech cyclist
@rikyrah: The people who are responsible for that change, and the people running the companies that took advantage of it, ought to be pilloried. And I’m not talking metaphorically.