qotd: The lesson of BC/BS of NC on special enrollment periods

Forbes
January 30, 2016
Obamacare Pummels Blue Cross Blue Shield Of NC--What Can We Learn From This?
By Chris Conover

Blue Cross and Blue Shield of NC is expecting to lose more than $400
million on its first two years of Obamacare business. In response to its
bleak experience with the Obamacare exchange, the company has decided to
eliminate sales commissions for agents, terminate advertising of
Obamacare policies, and stop accepting applications on-line through a
web link that provides insurance price quotes–all moves calculated to
limited Obamacare enrollment.

BCBSNC reported an operating loss of $50.6 million in 2014–the first
such loss in 15 years. Why? Because its Obamacare policies lost $123
million despite $343 million in various insurer bailouts (the so-called
"Three R's"–risk adjustment, reinsurance, and risk corridors).

What makes this shocking is that BCBSNC is the state's dominant insurer,
covering 72% of the large group market. If a deep-pocketed insurer such
as this cannot make a go of Obamacare, that does not bode well for many
smaller carriers who do not have large profits on other lines of
business with which to absorb whatever losses are generated by policies
sold on the Obamacare exchanges.

The fact that one of the nation's largest insurers, UnitedHealthcare
also has raised doubts about its ability to carry plans on the
healthcare law's exchanges beyond 2016 makes clear that this problem is
not unique to North Carolina.

The Problem is Getting Worse, Not Better

A large carrier such as BCBSNC can afford to absorb a temporary hit to
its profits. But the evidence in NC is that Obamacare losses are growing
over time rather than shrinking–a clearly unsustainable business model.

Because of its enormous losses, BCBSNC was able to convince the state's
insurance commissioner to allow a 32.5% average increase in its rates
for the 2016 Obamacare policies now being sold.

Special Enrollment Period Enrollees Are a Problem

The special enrollment period is open to people whose circumstances have
changed, such as getting married, having children, losing/changing jobs
or similar situations. However, many such individuals evidently are
staying insured only for several months, generating a lot of medical
bills and then discontinuing their coverage.

People who buy their coverage during these special enrollment periods
cost twice as much as Obamacare customers who secure their coverage
during open enrollment.

Again, this is not unique to NC: earlier this month, in response to
complaints by insurance companies, Obamacare administrators eliminated
six additional conditions that allowed people to sign up for health
coverage outside of the general enrollment period. According to UPI,
these steps will "make it more difficult for persons without health
coverage to financially manipulate or abuse the Affordable Care Act."

These steps presumably will be good news for the bottom line of insurers
such as BCBSNC. But they by no means eliminate various ways in which
people have figured out to game the system.

University of Minnesota economist Stephen Parente has calculated that
the cost of the least expensive policies on the Obamacare exchanges will
more than triple in NC between 2016 and 2017!

http://www.forbes.com/sites/theapothecary/2016/01/30/obamacare-pummels-blue-cross-blue-shield-of-nc-what-can-we-learn-from-this/#6ead235634f6

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ABC News
February 1, 2016
Insurer Aetna Lays out Concerns About ACA Exchange Business
By Tom Murphy, AP

Aetna has joined other major health insurers in sounding a warning about
the Affordable Care Act's public insurance exchanges.

The nation's third-largest insurer said Monday that it has been
struggling with customers who sign up for coverage outside the ACA's
annual enrollment window and then use a lot of care. This dumps claims
on the insurer without providing enough premium revenue to counter those
costs.

Both Aetna and UnitedHealth Group Inc. said the exchange customers they
get outside the annual enrollment window use more health care than those
who sign up within it. This includes some cases where it appears that a
customer bought coverage, used it and then dropped it.

"Insurance systems tend to get stressed when people can buy coverage
when they know they need it and then drop it when they know they don't,"
Chief Financial Officer Shawn Guertin told The Associated Press.

The Centers for Medicare and Medicaid Services recently outlined several
changes it said it was making to help shore up exchange enrollment windows.

Blue Cross-Blue Shield insurer Anthem Inc. also is paying close
attention to how the government deals with special enrollment periods as
it judges how sustainable the exchange business will be in the future,
CEO Joseph Swedish said recently.

UnitedHealth Group has said it will decide this year whether to
participate in the public exchanges in 2017.

HealthCare.gov CEO Kevin Counihan said in a Jan. 19 blog post that
special enrollment periods will not be available for "the vast majority
of consumers." HealthCare.Gov operates public insurance exchanges in 38
states.

"For example, special enrollment periods are not allowed for people who
choose to remain uninsured and then decide they need health insurance
when they get sick," he wrote.

http://abcnews.go.com/Business/wireStory/insurer-aetna-lays-concerns-aca-exchange-business-36647397

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The Hill
January 29, 2016
Sustaining the marketplace for a healthier America
By former Sen. Tom Daschle (D-S.D.)

To ensure the affordability of healthcare services, we must help
individuals not only access health insurance coverage, but also stay
covered.
Instead, our current regulatory framework seems to be having the
opposite effect.

For example, there are over 30 "special enrollment periods" – more than
that of any other federal government program, including Medicare
Advantage. Rightfully so, these periods are intended to help
individuals seek coverage outside of the normal enrollment period due to
certain qualifying life events, such as relocating or losing prior
coverage. However, there is little oversight in place to ensure that
special enrollment period requirements are satisfied. The unintended
consequence is that special enrollment periods enable individuals to
only seek coverage when they need care the most – a more costly
proposition for the patient and the health care system.

Fortunately, the Centers for Medicare & Medicaid Services (CMS) is
already taking an important first step to help address these concerns.
CMS is eliminating six special enrollment periods that are either no
longer needed or subject to abuse.

The marketplace will also require greater opportunity for innovation.

The Affordable Care Act has demonstrated great potential for
establishing a high quality, affordable health care market. Now is the
time to leverage that progress and ensure its sustainability by removing
barriers that discourage market participation and incentives that make
it easier to not seek care.

http://thehill.com/opinion/op-ed/267412-sustaining-the-marketplace-for-a-healthier-america

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Comment by Don McCanne

The losses experienced by Blue Cross and Blue Shield of North Carolina
represent a problem prevalent throughout the nation wherein patients,
when they become ill, enter the system during special enrollment periods
and then exit once their health care needs are met. The insurers along
with CMS have diagnosed the problem. There is nothing wrong with our
system of private insurers. It is the patients who are to blame because
they are gaming the system.

The solution? Reduce special enrollment periods that were designed to
assist patients who fell through the cracks. Instead, protect the
insurers by preventing these people from getting coverage for the care
that they need. Bankrupt them. That'll show them.

Reducing special enrollment periods is being touted as one of the
improvements that we need in the Affordable Care Act - the type of
incrementalism that we should pursue as we reject overtures to establish
a single payer national health program. We should pay no regard to the
fact that this incremental tweak is designed to assist the private
insurers and enhance their profits, at a cost of impairing access and
affordability for far too many patients.

Wasn't the Affordable Care Act designed to provide everyone with
affordable access to health care? No. Single payer has such a design,
but that was rejected to the benefit of the private insurers.

So now we are supposed to tweak the system to make it work better for
patients? No. We are tweaking it to make it work better for private
insurers. Damn those patients who try to cheat the insurers by gaming
the system.

Oh wait. Under single payer the goal is to deliberately include
absolutely everyone. The idea that someone is cheating by trying to
sneak into the system is totally foreign to the stewards of egalitarian
universal systems. How could anyone even think about devising methods of
keeping people out? Perhaps it's American Exceptionalism at work.