Limited open enrollment is a common risk pool management technique. It is designed to avoid people from not paying for insurance until after they either get hit with a bus or are told that they have a cancer diagnosis. Large commercial groups use limited open enrollment, small commercial groups use limited open enrollment, Medicare Part D and Medicare Advantage uses limited open enrollment. The Exchanges use limited open enrollment. Limited open enrollment combined with a mandate is designed to force the currently healthy into the insurance pool. This is fairly simple health design. It is not the only technique to force the healthy and usually the young in the pool. Another is massive subsidization so that premiums are dirt cheap. This is a technique commonly used in large groups where the employers are picking up 90% to 95% of the cost. Another method is a late enrollment penalty. Medicare uses fairly signifcant late enrollment penalties to make sure it hoovers up almost all the 65 year olds in the country in a very short time period.
There are a lot of ways to skin the risk pool management cat. Nevada is experimenting with continual open enrollment but a ninety day wait period outside of the normal open enrollment period.
Insurers that sell individual plans have to offer insurance to all comers during an annual open enrollment period, which this year ended for most people on March 31. However, the health law allows insurers to sell individual plans on the exchange outside the regular open enrollment if they wish to do so, as long as they don’t discriminate against people who are sick.
Health policy analysts say they don’t expect insurers to take advantage of the extra selling opportunity often. “The assumption is that no insurance company would do that because they’d just open themselves up to too much adverse selection,” says Sabrina Corlette, project director at the Georgetown University Center on Health Insurance Reforms.
Still, at least one state is embracing the option. Under a Nevada law that took effect in January, any insurer that sells individual health plans outside the state’s health insurance exchange has to offer those plans year round. To discourage people from waiting until they get sick to buy a plan, insurers can require a waiting period of up to 90 days for coverage to take effect.
This is interesting in a good way. I don’t think there will be a lot of sales in future years as people whose life situations have signficant changes will think to go on the Exchange and get Exchange subsidized insurance with a billing cycle’s wait time, but for the next year or two, I think this is a fascinating experiment. XpostFactoid has an interesting interview with Nicolas Bagley on the state waiver program. The state waiver program in PPACA allows states to offer alternative methods to achieve the same or better results at the same or lower costs of non-waivered PPPACA/Obamacare.
What about the individual mandate, which comes within the scope of Section 1332? Could it be replaced in a package that offers equivalent coverage to an equivalent population as the ACA?
“In principle, yes,’ Bagley said. “The waiver is designed to allow states to explore alternative means of structuring their healthcare system. If you have an alternative to the individual mandate that you find more palatable, if you think it can accomplish the same goal of near-universal coverage at the requisite baseline level, then the statute absolutely affords states that possibility.”
“One way to think of it is that the individual mandate operates to discourage the choice of going without health insurance. There are all sorts of ways you might go about discouraging the choice to go without. Restricting open enrollment is a good one: you might be reluctant to go without coverage for three years, even if you’d have gone bare for one, You can come up with all sorts of other sticks –or, alternatively, other carrots, such as finding money to make it even more appealing to purchase health insurance.”
Is a ninety day wait period sufficient to avoid significant adverse selection in the presumably small risk pool? I don’t know. If it is, it could be a push to changing the nature of the enrollment period to a rolling open enrollment with a limited free for all time and then a wait time with a weaker mandate. That could solve a political problem without policy damage.