Comment on NBPP 2021 Zero premium automatic renewal mapping

Commenting on federal rule making is good citizenship.

Two colleagues and I have been writing in the plan choice, administrative friction and zero premium space for the past year.  This gives us some expertise and insight on the implications of new administrative frictions that are being proposed in a new CMS rule for the 2021 ACA exchange plans.  Under the proposed rule CMS would assign full premium plans to people who qualify for a zero premium plan.  Zero premium plans would still be available under an active choice instead of the current passive choice availability.  We believe that the rule change would lead to tens of thousands of people to lose their coverage.

Below the fold  is our comment on the proposed Notice for Benefits and Payment Parameters 2021 rule:

We write to offer our comments on the Notice for Benefit and Payment Parameters 2021 (NBPP-2021). First, we would like to thank the Center for Medicare and Medicaid Services for their diligence on the risk adjustment model and the future opportunities for improvement in this model. Effective, clear, and well-fitted risk adjustment is critical to the functioning of insurance markets that use guaranteed issue and community rating.

We offer our comments on the proposal to change the rules for automatic re-enrollment schemas for individuals whose default plan in the coming year will be a zero premium plan (i.e., a plan that is 100% Essential Health Benefit (EHB) with a premium of zero dollars after applying premium tax credits). We believe that the proposed rule change for automatic re-enrollment of individuals with zero premium plans will lead to roughly 80,000 people losing their coverage.

Dr. Drake and Mr. Anderson have published peer-reviewed research in The Journal of the American Medical Association – Internal Medicine (1) on the importance of automatic re-enrollment on enrollment in the health insurance marketplaces. They also have published a study in Health Affairs (2) on the positive impact of the availability of zero premium plans on Marketplace enrollment among lower income enrollees. Ms. Rasmussen has published a study in Health Affairs on the switching behaviors of individual market buyers in response to premium changes (3). Her forthcoming dissertation focuses on consumer health insurance decision-making, particularly the selection of dominated plans in the individual health insurance market. Dr. Drake also has published other studies on Marketplace plan choice.  (4,5)

Our expertise is relevant to the following proposed change in the plan mapping algorithm:

“As such, we solicit comment on modifying the automatic re-enrollment process such that any enrollee who would be automatically re-enrolled with APTC that would cover the enrollee’s entire premium would instead be automatically re-enrolled without APTC. This would ensure that any enrollee in this situation would need to return to the Exchange and obtain an updated eligibility determination prior to having APTC paid on his or her behalf for the upcoming year.”

 

The adopted NBPP 2020 (84 FR 17454) had language in which CMS acknowledged current automatic re-enrollment rules reduced administrative expenses, improved the customer experience, and were consistent with typical practices in other insurance markets:

We appreciate commenters’ feedback and will take it into consideration as we continue to explore options to improve Exchange program integrity going forward. As we discussed in the preamble to the proposed rule, we agree that automatic re-enrollment significantly reduces issuer administrative expenses, makes enrolling in health insurance more convenient for consumers, and is consistent with broader industry practices.

 

Effectively, CMS is proposing to place individuals, likely those with low incomes (6), in plans that are dominated (7–10). A dominated health plan is one whose characteristics—premiums, benefits, and networks—are all inferior to another available plan.

The proposed rule to map individuals who would otherwise qualify for a zero premium plan into a plan that does not have advanced premium tax credits applied will increase administrative expenses for insurers, reduce convenience for consumers, and move the Exchange out of concordance with broader industry practices.

First, insurers will face higher administrative costs. Under the proposed rule, an estimated 270,000 enrollees would receive letters at the start of the open enrollment period announcing that their current plans, which are currently very affordable, will now cost hundreds if not thousands of dollars per month. Insurers will need more customer service representatives to address increased call volume, and they will need to spend more money on the termination and reinstatement of policies as their enrollees respond to the policy change.

This rule will not make the re-enrollment process more convenient for consumers.

We have performed a policy simulation on the basis of publicly available data from the 2019 plan year with the assumption that the proposed rule would have been in place for the 2020 automatic renewal process.  Dr. Drake and Mr. Anderson have shown that forcing returning enrollees to actively re-enroll in their health plans to stay insured led to a 30% reduction in future year enrollment compared to enrollees who had an option to automatically re-enroll (1). We assume that a recipient who receives a letter from their insurer informing them that their mapped plan will cost hundreds or thousands of dollars more per month will need to make an active choice to remain enrolled or they will otherwise terminate enrollment for non-payment of premium in January of the new policy year.  Ms. Katie Keith estimates that there were 270,000 individuals who purchased a zero premium plan in 2019 in the 38 states using the healthcare.gov platform (11). Building on our previous work and assuming no other policy changes occur, we would estimate 138,240 individuals would re-enroll in their zero premium plan for the next benefit year. However, if we assume that the proposed rule is implemented as currently written we estimate that only 58,050 individuals would re-enroll. Thus, over 80,000 individuals would lose coverage due to the increased administrative burden that would be imposed by this proposed rule.

This proposed rule is also orthogonal to typical industry practices.  Zero premium plans are quite common in the Medicare Advantage market segment. CMS has enthusiastically supported the proliferation of these plans in order to increase Medicare Advantage market penetration.  Zero premium exchange plans are legal and increasingly common (12). Industry best practices have been to use default choices to encourage continual enrollment in all lines of business.  This proposal discourages continual enrollment.

This particular element of the proposed rule will lead to 80,000 or more individuals losing coverage due to increased administrative burden. We strongly urge CMS to continue to apply the current automatic re-enrollment rules for all enrollees for the 2021 benefit year.

References

1. Drake C, Anderson DM. Association Between Having an Automatic Reenrollment Option and Reenrollment in the Health Insurance Marketplaces. JAMA Intern Med [Internet]. 2019 Dec 1 [cited 2019 Dec 12];179(12):1725–6. Available from: https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2751516
2. Drake C, Anderson DM. Terminating Cost-Sharing Reduction Subsidy Payments: The Impact Of Marketplace Zero-Dollar Premium Plans On Enrollment. Health Aff (Millwood) [Internet]. 2020 Jan 1 [cited 2020 Jan 7];39(1):41–9. Available from: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.00345
3. Rasmussen PW, Rice T, Kominski GF. California’s New Gold Rush: Marketplace Enrollees Switch To Gold-Tier Plans In Response To Insurance Premium Changes. Health Aff (Millwood) [Internet]. 2019 Nov 1 [cited 2019 Dec 11];38(11):1902–10. Available from: https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.00136
4. Drake C, Ryan C, Dowd B. Sources of Consumer Inertia in the Individual Health Insurance Market. :34.
5. Drake C. What are consumers willing to pay for a broad network health plan?: Evidence from covered California. J Health Econ [Internet]. 2019 May 1 [cited 2019 Dec 11];65:63–77. Available from: http://www.sciencedirect.com/science/article/pii/S0167629618304909
6. Drake C, Abraham JM. Individual market health plan affordability after cost-sharing reduction subsidy cuts. Health Serv Res [Internet]. 2019 [cited 2019 Nov 18];54(4):730–8. Available from: https://onlinelibrary.wiley.com/doi/abs/10.1111/1475-6773.13190
7. Afendulis C, Sinaiko A, Frank R. Dominated Choices and Medicare Advantage Enrollment [Internet]. National Bureau of Economic Research; 2014 May [cited 2019 Dec 11]. Report No.: 20181. Available from: http://www.nber.org/papers/w20181
8. Bhargava S, Loewenstein G, Sydnor J. Choose to Lose: Health Plan Choices from a Menu with Dominated Option. Q J Econ [Internet]. 2017 Aug 1 [cited 2020 Jan 13];132(3):1319–72. Available from: https://academic.oup.com/qje/article/132/3/1319/3769420
9. Liu C, Sydnor JR. Dominated Options in Health-Insurance Plans [Internet]. National Bureau of Economic Research; 2018 Mar [cited 2019 Dec 11]. Report No.: 24392. Available from: http://www.nber.org/papers/w24392
10. Sinaiko AD, Hirth RA. Consumers, health insurance and dominated choices. J Health Econ [Internet]. 2011 Mar 1 [cited 2019 Sep 17];30(2):450–7. Available from: http://www.sciencedirect.com/science/article/pii/S016762961100004X
11. The 2021 Proposed Payment Notice, Part 2: Exchange Provisions | Health Affairs [Internet]. [cited 2020 Feb 18]. Available from: https://www.healthaffairs.org/do/10.1377/hblog20200201.566219/full/
12. Branham DK, DeLeire T. Zero-Premium Health Insurance Plans Became More Prevalent In Federal Marketplaces In 2018. Health Aff (Millwood) [Internet]. 2019 May 1 [cited 2019 Dec 11];38(5):820–5. Available from: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.05392