The Obama Administration wants to make it as easy as possible for the 8 million Americans who bought insurance via an exchange last year to keep their plans. To that end, the auto-enrollment policy Health and Human Services unwrapped aims to reduce complexity for insurers, but it also brings new issues.
In a proposed rule released in late June, the Centers for Medicare & Medicaid Services outlined a system for how exchanges and insurers should verify and reach out to members to auto-enroll them in their current plan -- if they like the plans and don't want to switch.
"As we plan for open enrollment in year two and continue to build a sustainable long-term system, we are committed to simplifying the experience for consumers by allowing auto-enrollment," said HHS Secretary Sylvia Mathews Burwell. "We are working to streamline the process for consumers wishing to remain in their current plan."
Burwell said the agency is trying to take a page from the group insurance market, where many employees are auto-enrolled in their plans year after year. At the same time, since exchange shoppers, unlike individuals with employer-sponsored insurance, actually have a choice of insurers and benefit levels, Burwell said the auto-enrollment policy will encourage Americans to "reevaluate their health coverage needs for the coming year."
State-managed exchanges will be able to use the federal model outlined in the proposed rules or create their own policies, subject to approval.
Under the proposed rule, in the 38 states that will be using federally-facilitated exchange (or possibly more) this fall, health plan members will receive notices outlining ways to update their personal information, while eligibility is recalculated based on their most recent tax returns and updated data. The exchange will then automatically re-enroll them in their current plan and notify them of any tax credit changes that would increase or decrease their share of premiums.
Insurers would be tasked with reaching out to members before the start of open enrollment to explain the auto-enrollment and reconciliation process and to inform them of their premium obligations and any changes.
For enrollees with cost-sharing reductions, if the silver-level plan is being discontinued and another comparative silver plan is not being created, insurers must explain that unless the members select another silver-level plan, no cost-sharing reductions will be available, according to the proposed rules.
The auto-enrollment system could go a long way to reducing the problem of "churn," offering continuity of coverage for consumers while reducing administrative complexity and helping protect market share for insurers.
At the same time, some argue, individuals may get the best deal if they switch plans, depending on how premiums change.
"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, in a media release.
Avalere recently analyzed 2015-year exchange plans in nine states and found that in six states, the 2014 benchmark silver plan -- used as a baseline for premium tax credit subsidies -- will not be the benchmark for next year. In seven states, according to Avalere, the lowest-cost silver plan is also poised to change.
Exchange plan members may face the choice of keeping the plan they bought last year with potentially higher premiums, or selecting a new plan, with new networks and drug formularies, to approximate their initial premium costs -- a dichotomy that adds to the pressure on insurers to keep premium rates low if they want to retain membership.
Drafted with the help of the National Association of Insurance Commissioners, the proposed rules will be open for comment until late July.