Extending OEP into January next year

At the Health Affairs Blog, Coleman Drake of Pitt, and I argue that next year’s Open Enrollment Period for the ACA individual market on Healthcare.gov should be extended into January 2022.

We think that this will modestly increase enrollment throutgh lower administrative burden.  We’re building on some of our current research on zero premium plans in Colorado as well as research by John Graves and Katherine Swartz that found that people are financially stressed and cognitively overloaded during the holidays.

we found that households enrolled in zero-premium plans were covered, on average, for 50 more days than those that were not. This increase was entirely due to households that enrolled in zero-premium plans being more likely to start coverage on January 1. This effect was even larger among lower-income households, who likely have greater difficulty making their first payment on time due to a lack of access to checking accounts. By offering an extended open enrollment period, states such as Colorado have allowed households who miss the January 1 payment deadline with an opportunity to become insured on February 1 rather than remaining uninsured for the entire year.

Extending the open enrollment period into January also makes signing up for coverage easier from a practical standpoint. Katherine Swartz and John Graves found that families often experience more financial insecurity and have less mental energy to devote to purchasing health insurance in the last two weeks of the calendar year, likely due to the holidays. Simply allowing families the opportunity to purchase insurance at a less demanding time of year could thus help to reduce the number of uninsured.

Over the past couple of years, I have been moving away from pricing as the primary driver of enrollment to administrative burden and information costs.  We know that there are millions of people who are eligible for zero premium plans who are not enrolled.  We have seen counties switch from one monopolist to another where the new premium spreads offer nearly free plans to almost everyone and total enrollment collapses in the second year.  These are not pricing problems.  These are friction problems.

Coleman and I, along with two other great colleagues, have been looking at how zero premium plans change enrollment, plan choice and duration of coverage in Colorado’s marketplaces.  Colorado runs their open enrollment through the middle of January while Healthcare.gov runs their enrollment to only December 15th.  We did not find meaningful differences between plan choices and enrollment probabilities but we did find fairly significant duration effects.  Zero premium plans led to a lot more coverage over the course of a year.  This was almost entirely due to people with zero premium plans were far more likely to start their coverage on January 1st.  Conversely people with positive premium plans were more likely to start their coverage on February 1st compared to zero premium choosers.

This is an administrative burden story.  Starting a plan is really a three step process:

1. Pick a plan
2. Make an initial payment for the plan
3. Start your plan

Zero premium plans allow people to skip the second step.  Colorado’s extended OEP into January allowed people who had tried to pick a plan in December and failed (for whatever reason) to complete the second step (make a payment) to try again in January.  This is what shows up with February start dates.

Healthcare.gov can set the length of their OEP by regulation.  Changing the length of the OEP to include a second chance period in early January is likely to reduce the impact of administrative burden.  It is a step to improve coverage that does not require Congress and it produces a real and immediate benefit.