ObamaCare Open Enrollment 2.0

Be thankful if you’re not trying to enroll on the ObamaCare Exchange. Among the many things to be thankful for on this Thanksgiving Day is getting your health insurance in some other way.

November 15 marked the first day of the second open enrollment period for the Affordable Care Act, which ends February 15, 2015. Last year the open enrollment was an unmitigated disaster as the government web site repeatedly crashed. Enrollment numbers were so bad the White House refused to reveal them. It took months to get the web site functioning on an acceptable level.

What can we expect this year? Perhaps the foremost expert on this question is insurance industry consultant Robert Laszewski, who writes a health care reform blog entitled Health Care Policy and Marketplace Review.

Laszewski writes the open enrollment process will be improved – but not much. There may be fewer glitches on the web site, and fewer crashes altogether, but don’t expect the confusion to be much less than before. This is especially true when it comes to accurately measuring the enrollment numbers. There are several reasons for this confusion.

First, the government is encouraging people just to ignore the enrollment process, if they were enrolled last year, by choosing automatic renewal of their exchange policy. That will keep many people off the web site, at least initially, which will help avoid overloading the system.

Unfortunately, many of those people will find the cost of their premiums going up, in some cases substantially. The reason is that those plans that achieved the largest market share last year are raising their rates. Since they already have a large share of the market, they now are focusing on more profit. So if you keep the same plan you had last year by automatic renewal, you’ll probably pay more. The cheapest rates are being offered by those companies desperate to increase market share – that didn’t get your business last year.

This has led some in the liberal media to trumpet these lower rates. The left-leaning Kaiser Family Foundation provided a report pointing out that the cost of the benchmark Silver Plan would fall 0.8% in sixteen cities they studied:

Silver premium changes

Kaiser also reported that the lowest cost Bronze plan after tax credits in these markets would rise an average of 5.9%. These numbers sound pretty good.

But a closer look by Investor’s Business Daily found a different result. They looked at the same sixteen cities and found that the cost of the cheapest Bronze Plan for a 40-year-old non-smoker earing 225% of the poverty level ($26,260) will jump an average of 13.9%. How could these two studies come up with such different results?

Bronze Rate Shock

Investor’s Business Daily says KFF assumed a person’s income hasn’t changed instead of rising at least with inflation and the impact a falling Silver baseline plan’s cost has on the Bronze Plan subsidy. Which method of analysis is right?

Laszewski believes the IBD analysis is probably better than KFF, but the real answer can only be found when individuals compare their 2014 plans and rates to those offered on the web site for 2015. Automatic renewal may be the government’s recommendation – but that strategy benefits them and not the people.

Rate Increases

Measuring New Enrollment Numbers

The White House is already downplaying expectations for the new enrollment period. New HHS Secretary Sylvia Matthews Burwell seems to have adopted a new strategy of “under promise and over deliver” rather than that of her predecessor, Kathleen Sebelius, who seemed to do the opposite. Burwell has announced revised numbers for the currently enrolled down to 7.1 million after earlier claims as high as 9.5 million.

Furthermore, she has reduced expectations for the new enrollment down to 9.0 to 9.9 million by the end of 2015. This low estimate seems more designed to lower the bar of expectations than to achieve the necessary enrollment numbers for fiscal viability.

Once again, Laszewski offers insurance industry insider knowledge. He says ObamaCare needs to have a sustainable population participating by the time the insurance company support (the 3Rs of the insurance bailout provisions of the law) expires at the end of 2016. The long-time insurance industry underwriting rule is that you need 75% of an eligible group to be confident of a sustainable risk pool.

By this standard, they will need to enroll 75% of the 17.2 million eligible for enrollment by the end of 2016. That means their goal should be 12.9 million by 2016. Shooting for only 9 to 9.9 million this year seems like a low number and will put much more pressure on the administration in 2016.

Unfortunately, don’t expect any accurate measurements of enrollment numbers in the near future. Even if the White House intended to be transparent (not likely), accurate enrollment numbers will be hard to get. That’s because the rules for insurance companies prevent them from dropping customers until 90 days after they fail to receive a premium payment. This year will make that even more difficult as Laszewski explains.

He says many people enrolled last year will automatically be renewed by their current insurance plan. Then they may switch plans later when they find a cheaper plan. Then they may learn the cheaper plan has such narrow networks that they really should accept a more expensive third plan. Now they’re going to be counted by all three plans until the first two fail to receive a premium payment in the next 90 days. One person has been counted three times.

Therefore, any enrollment numbers released by the White House in the next three months are certain to be over-stated simply because people are being counted by multiple insurance companies. Look for a White House celebration about February 15 when Secretary Burwell announces they have exceeded their goals.

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