The ACA individual health insurance markets rely on private insurers to offer plans. Private insurers will sometimes expand their footprint and sometimes exit areas where they had previously been selling plans.
What happens when an insurer leaves a region?
We need to think about two scenarios.
The first is a mid-contract scenario. This occurs when an insurer blows up and is ordered by regulators to immediately cease operating as the regulators have severe doubts about the ability of an insurer to make good on its promises. Two things occur; first claims will be paid out of initially the insurer’s resources and then from a state guarantee fund which is like an insurance company for insurers funded by insurers. Secondly, the displaced members will have an opportunity to move via an active choice to another insurer. Sometimes those other insurers will count the cost sharing that the displaced members already paid. Sometimes, the other insurers won’t. This is a state regulator decision. We saw when the Co-Ops collapsed in 2015 and 2016 that different states made different decisions. We know that an active choice means a lot of people won’t transition relative to an automatic, passive enrollment process.
That is the rare and worse case scenario.
The more common scenario is that an insurer decides that it does not want to be in County X for next year sometime during the current year. At that point, it files its service area with the state regulator and everyone notices that County X is not on the service area list. In early fall, the company sends out a letter to the people it covers in County X saying that coverage ends on December 31st and that they will be crosswalked to another insurer if they take no action. CMS has a fairly complex plinko tree on how it moves people from one insurer to another but it prioritizes similarity between the soon to be discontinued plan and the plan that a person is automatically crosswalked into for passive re-enrollment. If the individual takes no action, they’ll get a new insurer’s ID card and coverage effective January 1 once the binder payment has been made.
At all times in either scenario, the individual policy holder SHOULD and CAN make an active choice by logging into Healthcare.gov or the state based marketplace and choose something totally different. That is likely the best outcome.
Now there is an interesting economics question. Surviving insurers in County X know the algorithm for re-assignment. They might have a clue about the relative profitability of the departing insurer’s members (odds are not great otherwise the departing insurer would not be leaving). The surviving insurers might want to cover these folks, they might not want to cover these folks. They have plausibly modifiable levers to pull that make their plans the more or less likely destination for folks who were covered by the departing insurer. Now do they pull those levers? And it is a complicated question if we assume multiple insurers in a county are still around. They can all pull levers or no one pulls levers or some pull some levers….
Now what happens when there is an unexpected/late season exit shock? Do we see the receiving insurer that may or may not have been expecting an influx of automatic new enrollment change their pricing in the second year after the shock?
Ohio Mom
Just a quick note to say although I rarely comment, I do read your posts.
My takeaways from today’s post: Oy, what is the matter with this country of ours, why do we have to make health coverage so difficult? What is described here is a game of hot potato with sick people as the potatoes.
And, Thank the powers of the universe that Ohio Dad and I have Medicare and Ohio Son has Medicaid. The closest we can get to living under universal health care, hit something of a jackpot.
RaflW
Charles Gaba seems to be warning on twitter and his site that Bright HealthCare may exit markets this fall (or collapse!). Could impact about 1M ppl in up to 17 states.
sab
I am on medicare now, but your posts have been so helpful for us, and still helpful to our kids, especially since some of them move, and every county in every state will have a different insurance climate.
Ruckus
@Ohio Mom:
I agree.
I don’t have the same remedy that you do but it definitely works for me. I am fortunate that I can use the VA so I’m not exposed to the healthcare insurance market or the general healthcare industry. Because I was working till the middle of last year I will have to do copays for the remainder of this calendar year. Now there are some drawbacks of course, there always are. But they are minimal and if one pays attention, not all that big a deal.
Imagine if everyone had this kind of care. I’m sure that some of our more than selfish citizens would scream bloody murder if they had to use the same healthcare as everyone else, I mean after all they are so fucking special and all…….just ask them. Oh wait, you don’t have to ask, they will tell us without anyone asking.
Citizen Alan
I don’t think I’ve ever commented on one of David’s insurance posts before, but it’s finally become an issue for me, so I’m reaching out for advice (or at least reassurance).
My last day of federal employment is 8/28. I get a 31 day grace period for BCBS Federal which means I can stay insured through my current job through 9/28. I am already approved for BCBS Mississippi (premium about $800/month-ugh!), but for some annoying reason, they will only start coverage on the 1st of the month. So I must choose between one of the following 2 options:
Thoughts?
Doug R
Sounds like a great opportunity to expand a public to option, to cover when a private insurer leaves.
Another Scott
@Citizen Alan: I think choice #2 is the easy pick, but you have to be comfortable with your choice. Can you stay in bed those 2 days? :-)
Good luck!
Cheers,
Scott.
WaterGirl
@Citizen Alan: I was in grad school myself and I know how crazy it can get, so I forwarded your comment to David by email in case he doesn’t get back to this thread.
WaterGirl
@Another Scott: On the other hand, I know a woman who had 3 days of lapsed coverage between jobs and she miscarried and had to pay for the whole thing out of pocket.
Which just added insult to injury, as you can imagine!
I doubt that Citizen Alan will be pregnant, but shit happens, and
not alwaysnever at a convenient time.Citizen Alan
@WaterGirl: Thanks!
Mai Naem mobile
@RaflW: they don’t mention AZ in Bright HC’s problem states but I looked at Bright last year because their total deductibles were quite a bit lower than the other insurers. I think there’s were around $4K and everybody else’s is around $8K . I figured I would wait to see if they were still around this year.
Citizen Alan
@WaterGirl: Like I said, I would have the opportunity to get COBRA (it’s not COBRA, but I can’t remember the correct acronym) up through the end of November and backdate it if god forbid something happened in those 48 hours. It’s just I tend to view all insurance companies as faceless, Kafkaesque and borderline-malevolent bureaucracies that are always looking for a chance to screw people. So I worry there’s something I’m missing that could bite me in the ass. Like “what if I get hit by a bus on September 29 and spend 61 days in a coma?” sort of worries.
steppy
I just find the term “plinko tree” to be an elegant visualization of the decision algorithm.
Another Scott
@Citizen Alan: Understood.
This might be a good reason to have things like a healthcare power of attorney (or whatever it’s called in MS). Probably not at the top of your list while you’re job hunting, but if worry about things like this really do affect your quality of life then putting your wishes in writing can help.
Presumably someone with that authority could sign you up while you’re in a coma. The gods forfend!! ;-)
Cheers,
Scott.
Ruckus
@Citizen Alan:
Is the risk great or small for you given your health and age?
Does the lack of coverage for those 2 days have any concern for insurance going forward?
It sounds like you actually can get insurance for any problem during the gap, although it might be a pain in the butt.
Can you purchase the new insurance before your current expires with a start date of 10/1 so that the gap is the minimum possible and your risk is small?
For me, I’ve been without insurance before (for a lot longer timeframe) and in the end it worked out OK. A lot depends on your general health and activity level of your life.
For me I’d forgo the 2 days for the $800 but I’m not you and you have to be comfortable in your situation.
Citizen Alan
@Another Scott: Oh I do. In fact, I’ve had one for years. After it took my dad 6 weeks in ICU to die back in 2013 and my sister wailed over the though of pulling the plug, I wanted to make absolutely sure that no one in my family would have any say in my health care or end-of-life decisions.
Mai Naem mobile
@Citizen Alan: David is obviously the expert here but I think some coverage outside the marketplace is based on you having continuous coverage for five years if for whatever reason you ever have to go outside the marketplace. That rule might have changed with the ACA.
WaterGirl
@Citizen Alan:
Okay, that changes the dynamic, in my opinion. I had forgotten about the backdating thing, but I believe that’s required by law so I don’t think even the most asshole-ish insurance company could back out of that.
Citizen Alan
@Ruckus: I am literally at the point where BCBS-MS is just waiting for an email from me saying I want coverage starting 9/1 or 10/1. I am 53, morbidly obese, and diabetic, but the last is controlled by insulin. I am otherwise in surprisingly good shape for a man of my age and weight. My GP was ecstatic over my A1C and other vitals during my last checkup.
WaterGirl
@Citizen Alan: Leave your signed paperwork with someone you trust, just in case. :-)
David Anderson
@Citizen Alan: I am assuming that you qualify for COBRA?
If that assumption is right, then you have 60 days after your COBRA eligibility date to retroactively start your coverage. This effectively gives you coverage if you need it for the weekend that you run naked without having to pay for it unless you get hit by a meteor that weekend.
Here is an early post on that option: https://balloon-juice.com/2013/12/02/the-cobra-option/
Ohio Mom
@David Anderson: Several years ago there was a month-long gap between when Ohio Dad’s job-based health insurance ran out and when I could start Medicare.
On your/David Anderson’s advice, Ohio Dad went straight on to COBRA and I went without any coverage for that month knowing I could retroactively sign up for COBRA if need be.
Somehow I made it through the month unscathed. I tried very hard not to think about being uncovered, which is to say i could not forget.
I remain thankful for that good advice and the money saved during a financially dicey time for us.
Ruckus
@Citizen Alan:
I’m 20 yrs older than you and have had a minor heart attack, cancer and have had chronic migraines for decades. I’d bet that the percentage of extremely healthy individuals is smaller than most of us think. Best of luck in your decision!
Citizen Alan
@David Anderson:
It’s not exactly Cobra, but TCC. Temporary continuation of coverage for judicial employees. The 60 day backdate provision does apply to it though.
David Anderson
@Citizen Alan: I’m not familiar with TCC — speak with HR to make sure that COBRA is the appropriate analogue
Tony G
@Ohio Mom: The problem is that if the sick people had been a member of God’s Elect, they would not have been punished with illness in the first place. It’s best to just let them die. (There are tens of millions of Americans who view the world that way, including many libertarians who don’t even believe in God.). The culture of cruelty in this country.
Tony G
@Tony G: … and the absurd complexity is a deliberate part of the intentional cruelty. They should have been born rich, so their suffering is their own fault.