Insurance companies are struggling with a new request by the Obama administration to make sure people receive medical benefits under healthcare reform come January 1, even if they miss a sign-up deadline set for next Monday.
The government has sought to reassure consumers, already frustrated by technical problems that stalled access to its HealthCare.gov enrollment website in October and November, that those who need coverage starting on New Year’s Day will be able to sign up.
Last week, the administration appealed to the insurance industry to accept people who sought benefits past the December 23 enrollment deadline for January 1, and to consider approving retroactive coverage for consumers who signed up during the month of January.
So far, the answer has amounted to a big “maybe.”
Insurers are worried that some consumers will sign up for retroactive January plans only if they have incurred a hefty medical bill. It is unclear what the costs of that would be or how many shoppers might take advantage of the policy.
“It creates a situation where someone might be able to apply for insurance when they have already had services” such as in the emergency room, said Mary Beth Chambers, spokeswoman for Blue Cross Blue Shield of Kansas. “It’s like calling for homeowners insurance when your house is already on fire.”
Chambers said that such cases would probably be “few and far between.”
BCBS of Kansas, the largest insurer in a state where about 14 percent of the population is uninsured, has decided to give people until January 10 to pay their premiums and receive retroactive coverage beginning January 1. They are still hewing to the December 23 enrollment deadline while they study the feasibility of allowing retroactive sign-ups as late as January 31.
Some of these changes and the technical problems associated with the rollout of the Affordable Care Act, commonly called Obamacare, could lead to people facing a gap in coverage next month. It could also create new political problems for President Barack Obama over his signature domestic policy, which opposition Republicans have tried to derail for years.
EXTENDED PAYMENT DATE
Aetna Inc, one of the biggest players on the exchange, is going to extend the payment date until January 8, make service workflow changes to support the deadline shift to December 23 from December 15 and already planned to ensure customers will not miss important appointments, such as cancer treatments. But it said some of the administration’s suggestions would require systems changes and more service support people, which was not viable.
“We are concerned that changing the rules at this late date and allowing for this degree of variability will lead to significant consumer confusion about the marketplace,” Aetna spokeswoman Cynthia Michener said.
Cigna Chief Executive David Cordani said the company will decide this week which measures to pursue. The company, which has only a small business catering to individuals, said that its employer-based plans already offer similar programs to ensure continuity of coverage.
Other insurers, including Molina Healthcare Inc which is selling Obamacare plans in 9 states, have said they will be extending the payment deadline but are stopping there.
The request has raised concerns among some Wall Street analysts over a steady stream of changing regulations. Moody’s, which reviews credit ratings of companies, said the additional conditions are a negative influence on insurers’ business, requiring administrative changes to track new customers, and will be confusing for doctors and consumers.
ENROLLMENT INCREASES BUT STILL LOW
Enrollment in Obamacare plans has picked up in December, due to fixes for HealthCare.gov, which serves 36 states, and as consumers nationwide anticipate the December 23 deadline for January 1 benefits. The Congressional Budget Office has estimated that 7 million people will sign up for coverage by the time enrollment for all of 2014 ends on March 31.
But the pace of enrollments so far – 365,000 people by the end of November – has cast doubt on the government’s ability to reach that many people in the program’s first year.
Wall Street analysts have lowered their estimates for enrollment to almost half the CBO estimate, or less. Insurers have tempered their expectations as well. For the larger players like Aetna, WellPoint and Humana, the exchange market is just a fraction of their total membership, which range from more than 10 million people to 40 million at UnitedHealth Group Inc.
More than 150 million people receive insurance through their employers and 100 million others have health coverage through government programs – Medicare for the elderly and Medicaid for the poor.
Brian Hale, a senior vice president for health policy at Jackson Hewitt Tax Service in Nashville, Tennessee, said that he believes the number of people trying to sign up for January 1 Obamacare coverage is a fraction of the 10 to 20 million people in the market for individual insurance this year.
Out of that, the number who may be truly displaced is “a much smaller number of people then it’s been made out to be,” Hale said.
Ron Williams, the former CEO of Aetna who now advises private equity firm Clayton, Dubilier & Rice, said he believed insurers could allow for retroactive coverage for a few more days in January and still mitigate the risk of high costs.
“There is some risk there; it is a limited risk,” Williams said.
Funding under the healthcare law may help cover some of that risk, or the costs that come when very sick people sign up at a disproportionate rate versus healthy people.
Vantage Health Plan in Louisiana is planning to extend the deadline for people to enroll for January 1 coverage, but has not decided how long to do so, according to Billy Justice, Vantage’s marketing and sales director.
Justice said that the law prohibits insurers from denying coverage to someone with a prior illness “and there should be risk adjustments at the end of the year for insurance companies that get the highest risk.”