qotd: Problem with defaulting to automatic plan renewal in exchanges

Department of Health and Human Services
June 19, 2014
Proposed rule

This proposed rule would specify additional options for annual
eligibility redeterminations and renewal and re-enrollment notice
requirements for qualified health plans offered through the Exchange,
beginning with annual redeterminations for coverage for plan year 2015.

In paragraph (j)(1), we propose that if an enrollee remains eligible for
enrollment in a QHP through the Exchange upon annual redetermination,
and the product under which the QHP in which he or she was enrolled
remains available for renewal, consistent with 45 CFR §147.106, such
enrollee will have his or her enrollment in a QHP under the product
renewed unless he or she terminates coverage, including termination of
coverage in connection with voluntarily selecting a different QHP, in
accordance with §155.430. In this situation, we propose that the QHP in
which the enrollee will be renewed will be selected according to the
following order of priority: first, in the same plan as the enrollee's
current QHP, unless the current QHP is not available; second, if the
enrollee's current QHP is not available, the enrollee's coverage will be
renewed in a plan at the same metal level as the enrollee's current QHP;
third, if the enrollee's current QHP is not available and the enrollee's
product no longer includes a plan at the same metal level as the
enrollee's current QHP, the enrollee's coverage will be renewed in a
plan that is one metal level higher or lower than the enrollee's current
QHP; and fourth, if the enrollee's current QHP is not available and the
enrollee's product no longer includes a plan that is at the same metal
level as, or one metal level higher or lower than the enrollee's current
QHP, the enrollee's coverage will be renewed in any other plan offered
under the product in which the enrollee's current QHP is offered in
which the enrollee is eligible to enroll.

http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/508_CMS-9941-P-OFRv-6-26-14.pdf

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Avalere
June 26, 2014
Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases
in 2015 Unless They Switch Plans
By Elizabeth Carpenter

Under the Affordable Care Act, federal premium assistance is tied to the
second lowest cost silver plan ("benchmark plan") in a given region.
Subsidized exchange enrollees who select a more expensive plan must
pay the difference—dollar for dollar—between the benchmark plan premium
and their selection. In six of nine states analyzed by Avalere, the
2014 benchmark silver plan will lose benchmark status in 2015. Further,
in seven of the nine states, the lowest cost silver plan will also
change in 2015.

"Most enrollees in 2014 chose a plan based on the monthly premium.
However, the lowest cost plans in 2014 may no longer be low cost in
2015," said Elizabeth Carpenter, director at Avalere Health. "Before
consumers renew their 2014 plan, they should consider the tradeoff
between continuity of care and lower monthly premiums."

"Two-thirds of people enrolling in silver plans are choosing one of the
two lowest cost silver options," said Caroline Pearson, vice president
at Avalere. "The competitive landscape for plans is changing in 2015.
However, the premium subsidies are tied to the benchmark plan and a
percentage of income. Consumers have to pay the difference if they
enroll in a plan more expensive than the benchmark. Those receiving
federal premium subsidies may need to switch plans in 2015 to avoid
paying more than the limits established by the ACA, and the impact will
be more profound for lower-income consumers."

http://www.avalerehealth.net/expertise/managed-care/insights/exchange-plan-renewals-many-consumers-face-sizeable-premium-increases-in-20

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Comment by Don McCanne

Acknowledging the complexity of the administration of the exchanges
under the Affordable Care Act, HHS has decided to simplify the process
by making renewal of plan enrollment automatic unless the enrollee
decides on a different option. It is estimated that about 95 percent of
enrollees will qualify for automatic renewal, and undoubtedly many will
passively accept this hassle-free option. That may not be a wise choice.

The Avalere report indicates that the benchmark silver tier plan - the
plan with the second lowest premium in the silver tier - will change in
many of the exchanges since premium bids are changing for most plans.
Since the enrollee is responsible for the full balance of the premium
above the benchmark plan, net premiums for the enrollees could increase
significantly unless the person opted to change to next year's benchmark
plan or a plan close to it.

As Avalere director Elizabeth Carpenter states, "(consumers) should
consider the tradeoff between continuity of care and lower monthly
premiums." This means that those current enrollees who do not passively
accept higher premiums will be forced to choose between higher premiums
or a change in their narrow provider networks, the latter likely
resulting in disruption of continuity of care.

Further, according to the HHS rule, the individual could be transferred
to a different metal tier, thereby losing eligibility for the subsidies
for cost sharing, though that would likely occur only in exchanges that
have few choices.

Even something as simple as "automatic renewal" becomes complex when you
try to rely on market dynamics to satisfy private insurers. Imagine if
at renewal time you didn't have to make a decision on what premiums you
could afford, or on what provider networks you would choose when none of
them quite fit, or where you might fall based on subsidy eligibility
redetermination.

Imagine instead if the concept of renewal did not even exist - you were
simply automatically enrolled for life. We really do need to replace
this boondoggle with a single payer national health program - quality
health care for everyone at a price we can afford.